Participation Agreement - Electronic Arts Redwood Inc., Electronic Arts Inc., Selco Service Corp., Victory Receivables Corp, The Bank of Tokyo-Mitsubishi Ltd., and KeyBank NA
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PARTICIPATION AGREEMENT
Dated as of December 6, 2000
among
ELECTRONIC ARTS REDWOOD, INC.,
as the Lessee and the Construction Agent,
ELECTRONIC ARTS, INC.,
as the Guarantor,
SELCO SERVICE CORPORATION,
as the Lessor,
VICTORY RECEIVABLES CORPORATION,
as the Note Purchaser,
THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH,
as the Conduit Agent,
THE VARIOUS LIQUIDITY BANKS,
and
KEYBANK NATIONAL ASSOCIATION
as the Letter of Credit Issuer and the Agent
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (as amended, restated or otherwise
modified and in effect from time to time, this "Participation Agreement"), dated
as of December 6, 2000, is entered into by and among ELECTRONIC ARTS REDWOOD,
INC., a Delaware corporation, as the lessee (in such capacity, together with its
permitted successors and assigns, the "Lessee") and as the construction agent
(in such capacity, together with its permitted successors and assigns, the
"Construction Agent"); ELECTRONIC ARTS, INC., a Delaware corporation, as the
guarantor (in such capacity, together with its permitted successors and assigns,
the "Guarantor"); SELCO SERVICE CORPORATION, an Ohio corporation doing business
in California as Ohio SELCO Service Corporation, as the lessor and as the sole
equity investor (in such capacities, together with its permitted successors and
assigns, the "Lessor"); VICTORY RECEIVABLES CORPORATION, a Delaware corporation,
as the note purchaser (in such capacity, together with its permitted successors
and assigns, the "Note Purchaser"); THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK
BRANCH, as the agent for the Note Purchaser and the administrative agent for the
Liquidity Banks (in such capacities, together with its permitted successors and
assigns, the "Conduit Agent"); the financial institutions (including, without
limitation, those certain financial institutions appearing on the signature
pages hereof) which are parties to this Participation Agreement and the
Liquidity Documentation from time to time (such financial institutions to be
referred to collectively as the "Liquidity Banks"); and KEYBANK NATIONAL
ASSOCIATION, as issuer of the Letter of Credit (in such capacity, together with
its permitted successors and assigns, the "Letter of Credit Issuer") and as the
agent for the Lessor, the Note Purchaser, the Conduit Agent, the Liquidity Banks
and the Letter of Credit Issuer (in such capacity, together with its permitted
successors and assigns, the "Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in Appendix A.
WITNESSETH:
WHEREAS, the Lessee, the Construction Agent, the Guarantor, the Lessor,
the Note Purchaser, the Conduit Agent, the Liquidity Banks, the Letter of Credit
Issuer and the Agent have entered into this Participation Agreement for the
purpose of setting forth the terms and conditions pursuant to which the Lessor
would provide a lease facility to the Lessee; and
WHEREAS, in order for the Lessor to provide such lease facility to the
Lessee, the Lessor shall (a) acquire the land described in Exhibit A (as more
fully defined in Appendix A, the "Land") from the Existing Land Owner with funds
advanced by the Note Purchaser to the Lessor under one or more Notes issued by
the Lessor to the Note Purchaser on the Initial Funding Date pursuant to the
Note Purchase Agreement and through the funding by the Lessor of the Equity
Investment from its own funds pursuant to the terms of this Participation
Agreement; (b) construct the Improvements on the Land with funds to be advanced
from time to time by the Note Purchaser under the Notes; (c) lease such Land and
Improvements to the Lessee pursuant to the terms and conditions of the Master
Lease, and (d) grant to the Lessee the right to purchase such property; and
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WHEREAS, the Lessor and certain of the other Lessor Parties will have
certain rights and remedies under the Master Lease, including, without
limitation, the right to receive payments of Rent thereunder; and
WHEREAS, in order to finance the funds to be advanced under the Notes
by the Note Purchaser pursuant to the Note Purchase Agreement, the Note
Purchaser, pursuant to the Liquidity Documentation, may from time to time
request Loans from the Liquidity Banks or sell Percentage Interests in the
obligations evidenced by the Notes to the Liquidity Banks; and
WHEREAS, to secure the obligations of the Lessee to the Lessor under
the Operative Documents, the Lessee has, under each of the Master Lease, the
Precautionary Deed of Trust, the Precautionary Financing Statements and the
Memorandum of Lease, granted a security interest in and Lien on all of its right
and interest in and to the Property covered by the Master Lease; and
WHEREAS, to secure the obligations of the Lessor pursuant to the
Operative Documents, the Lessor has, pursuant to the Deed of Trust, granted a
security interest in and a Lien on all of its right and interest in and to the
Property and the Master Lease and has assigned all of its right and interest in
and to the Precautionary Deed of Trust and the Precautionary Financing
Statements to the Agent; and
WHEREAS, the Guarantor has agreed to guarantee the Obligations of the
Lessee inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the leasing of the Property by the Lessor to the Lessee; and
WHEREAS, to cover any shortfall that may occur upon the exercise by the
Lessee of the Remarketing Option pursuant to Section 18.3 of the Master Lease,
the Letter of Credit Issuer has agreed to issue the Letter of Credit for the
benefit of the Liquidity Banks.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Participation Agreement and the other Operative Documents and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions; Interpretation. Unless the context shall
otherwise require, capitalized terms used and not defined herein and in the
other Operative Documents shall have the meanings assigned thereto in Appendix A
hereto for all purposes hereof, and the rules of interpretation set forth in
Appendix A hereto shall apply to this Participation Agreement and the other
Operative Documents.
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ARTICLE II
DOCUMENTATION DATE; FUNDING DATES
Section 2.1 Documentation Date. The Documentation Date (the
"Documentation Date") shall occur on the earliest date on which the following
conditions precedent shall have been satisfied or waived:
(a) Participation Agreement. This Participation Agreement
shall have been duly authorized, executed and delivered by the parties hereto.
(b) Note Purchase Agreement. The Note Purchase Agreement shall
have been duly authorized, executed and delivered by the parties thereto.
(c) Liquidity Documentation. All Liquidity Documentation shall
have been duly authorized, executed and delivered by the parties thereto.
(d) Letter of Credit The Letter of Credit, substantially in
the form attached to the Reimbursement Agreement, shall have been duly issued
and delivered by the Letter of Credit Issuer to the Agent for the benefit of the
Liquidity Banks.
(e) The Lessee's Resolutions and Incumbency Certificate, etc.
The Lessee shall have delivered to the Lessor Parties (i) a certificate of its
Secretary or an Assistant Secretary attaching and certifying as to (A) the
resolutions of its Board of Directors duly authorizing the execution, delivery
and performance by it of the Operative Documents to which it is a party, (B) its
certificate of incorporation and by-laws, and (C) the incumbency and signature
of persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party; and (ii) a certificate of good standing with
respect to it issued by the Secretary of State of the state of its incorporation
and for the jurisdiction in which the Property is located, no earlier than ten
(10) days prior to the Documentation Date.
(f) The Guarantor's Resolutions and Incumbency Certificate,
etc. The Guarantor shall have delivered to the Lessor Parties (i) a certificate
of its Secretary or an Assistant Secretary attaching and certifying as to (A)
the resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by it of the Operative Documents to which it is a
party, (B) its certificate of incorporation and by-laws, and (C) the incumbency
and signature of persons authorized to execute and deliver on its behalf the
Operative Documents to which it is a party; and (ii) a certificate of good
standing with respect to it issued by the Secretary of State of the state of its
incorporation and for the jurisdiction in which the Property is located no
earlier than ten (10) days prior to the Documentation Date.
Section 2.2 Funding Dates.
(a) The dates on which the funds are to be advanced under the
Notes (and, with respect to the Initial Funding Date, the funding of the Equity
Investment shall be made) shall be referred to herein and in other Operative
Documents as the "Funding Dates" and each, a "Funding Date".
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(b) The Funding Date with respect to the financing of the Land
Acquisition Costs by the Lessor (the "Initial Funding Date") shall be December
7, 2000 (or such other Business Day selected by the Lessee which in no event
shall be earlier than the first Business Day after the Documentation Date)
subject to the satisfaction (or waiver by the appropriate Lessor Parties) of the
conditions set forth in Section 6.1 herein.
(c) Each interim Funding Date with respect to the financing of
the Improvements Construction Costs (each, an "Interim Construction Period
Funding Date") shall be on a Business Day selected by the Lessee and shall occur
no more frequently than once a month during the Construction Period, subject in
each instance to the satisfaction (or waiver by the appropriate Lessor Parties)
of the conditions set forth in Section 6.2 herein.
(d) The final Funding Date with respect to the financing of
the final Improvements Construction Costs (the "Final Construction Period
Funding Date") shall be on the Business Day selected by the Lessee occurring no
later than ninety (90) days after the date on which Final Completion shall have
occurred, subject to the satisfaction (or waiver by the appropriate Lessor
Parties) of the conditions set forth in Section 6.3 herein.
(e) Subject to Section 3.5(c) below, each Funding Date with
respect to the funding of the Accreted Amounts (as defined in Section
3.1(a)(iii) below) during the Base Lease Term (each, a "Base Lease Term Funding
Date") shall occur on each Basic Rent Payment Date during the Base Lease Term,
subject to the satisfaction (or waiver by the appropriate Lessor Parties) of the
conditions set forth in Section 6.4 herein.
ARTICLE III
ISSUANCE OF NOTES AND FUNDING OF THE EQUITY INVESTMENT;
PURCHASES OF NOTES; APPLICATION OF
PROCEEDS OF NOTES AND THE EQUITY INVESTMENT
Section 3.1 Commitment of the Lessor to Issue Notes.
(a) Subject to the terms and conditions hereof, including,
without limitation, the delivery of a Funding Notice with respect to each
Funding Date (other than a Base Lease Term Funding Date), and pursuant to the
relevant provisions of the Note Purchase Agreement:
(i) on the Initial Funding Date, the Lessor
shall issue one or more Notes in an aggregate principal amount of $125,450,000.
(ii) Subject to Section 3.1(b) hereof, on each
Interim Construction Period Funding Date and on the Final Construction Period
Funding Date, the Note Purchaser shall advance funds to the Lessor under the
Notes in the aggregate principal amount equal to the amount specified in the
relevant Funding Notice.
(iii) Subject to Section 3.1(b) hereof, on each
Base Lease Term Funding Date, and provided that the Lessee shall have paid to
the Lessor the Security Deposit as provided in Section 3.4 of the Master Lease,
the Note Purchaser shall advance funds to the
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Lessor under the Notes in an aggregate principal amount equal to $380,952.38
(each such amount, the "Accreted Amount").
(b) The aggregate principal amount outstanding under the Notes
at any time shall not exceed $125,450,000 (such amount, the "Aggregate Note
Purchase Commitment"). For accounting purposes, all funds advanced to the Lessor
under the Notes pursuant to the Note Purchase Agreement shall constitute debt.
(c) Upon payment of the Security Deposit by the Lessee
pursuant to Section 3.4 of the Master Lease, the Agent, on behalf of the Lessor
shall apply the proceeds of the Security Deposit to repay funds advanced under
the Notes in an aggregate principal amount equal to the amount of the Security
Deposit so paid and, thereafter, such repaid funds shall no longer be
outstanding for any purpose, including the calculation of the Interest Amount
under Section 4.2(a) hereof. After such repayment, however, the aggregate
principal amount outstanding under the Notes will be increased on each Base
Lease Term Funding Date to reflect the funds advanced to the Lessor under the
Notes on such Funding Date for the Accreted Amount.
Section 3.2 Commitment of the Lessor to Fund the Equity Investment.
Subject to the terms and conditions hereof, including, without limitation, the
delivery of the initial Funding Notice, on the Initial Funding Date, the Lessor
shall fund the entire Equity Investment in the amount of $4,550,000,
representing three and one-half percent (3.5%) of the Aggregate Commitment
Amount (such amount, the "Aggregate Equity Investment Commitment"). For
accounting purposes, the Equity Investment made by the Lessor hereunder shall
constitute equity.
Section 3.3 Commitment to Make Note Purchases. Subject to the terms and
conditions hereof and the terms and conditions of the Note Purchase Agreement,
the Note Purchaser shall purchase the Note or Notes issued on the Initial
Funding Date and on each subsequent Funding Date shall advance funds under the
Notes as requested in the relevant Funding Notice. Notwithstanding the
foregoing, the Note Purchaser shall not be required to purchase the Notes to be
issued on the Initial Funding Date or to advance funds to be advanced to the
Lessor under such Notes on the Initial Funding Date unless the Lessor
simultaneously funds the Equity Investment to be made on the Initial Funding
Date.
Section 3.4 Commitment to Fund the Equity Investment. Subject to the
terms and conditions hereof, the Lessor shall, on the Initial Funding Date, fund
the Equity Investment as requested in the initial Funding Notice.
Notwithstanding the foregoing, the Lessor shall not be required to fund the
Equity Investment on the Initial Funding Date unless the Note Purchaser
simultaneously purchases the Notes to be issued by the Lessor on the Initial
Funding Date and advances the funds to be advanced to the Lessor under such
Notes on the Initial Funding Date.
Section 3.5 Notice Procedures with respect to the Funding of Advances
under the Notes and the Equity Investment.
(a) With respect to the purchase of the Notes, the funding of
the advances to be made under such Notes, and the funding of the Equity
Investment to be made on the Initial Funding Date, the Lessee shall give the
Agent, for the benefit of the Lessor and the Note
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Purchaser, prior written notice delivered not later than 10:00 a.m., New York
time, one Business Day prior to the proposed Funding Date specifying: (i) the
proposed Funding Date, (ii) the principal amount to be advanced on such Funding
Date under the Notes, (iii) the amount of the Equity Investment to be funded and
(iv) the application of the proceeds of such funds advanced under the Notes and
the Equity Investment. The Funding Notice shall be in the form of Exhibit B-1.
(b) With respect to the funds to be advanced under the Notes
on each Funding Date (other than the Initial Funding Date and any Base Lease
Term Funding Date), the Lessee shall give the Lessor and the Note Purchaser
prior written notice delivered not later than 2:00 p.m., New York time, three
(3) Business Days prior to the proposed Funding Date, specifying: (i) the
proposed Funding Date, (ii) the principal amount to be advanced on such Funding
Date under the Notes (which, unless otherwise agreed to by the Note Purchaser,
shall be in an aggregate amount equal to or greater than $1,000,000) and (iii)
the application of the proceeds of such funds advanced under the Notes. The
Funding Notice shall be in the form of Exhibit B-2 with respect to all Interim
Construction Period Funding Dates and Exhibit B-3 with respect to the Final
Construction Period Funding Date.
(c) With respect to the funds to be advanced under the Notes
on each Base Lease Term Funding Date, provided that the Lessee shall have paid
the Security Deposit pursuant to Section 3.4 of the Master Lease, such funds
shall be in the amount set forth in Section 3.1(a)(iii) hereof and shall be used
to increase the Outstanding Lease Balance such that the Outstanding Lease
Balance at the Maturity Date shall be equal to the aggregate amount of the Land
Acquisition Costs and the Improvements Construction Costs. Unless the Lessee
provides the Lessor and the Note Purchaser with ten (10) Business Day's prior
written notice to the contrary, the Lessee shall be deemed to have requested the
funds to be advanced on each Base Lease Term Funding Date.
(d) Upon satisfaction or waiver of the conditions precedent to
each advance under the Notes, and with respect to the Initial Funding Date, the
funding of the Equity Investment, set forth in Article VI hereof, the Note
Purchaser shall advance such funds under the Notes and the Lessor shall fund the
Equity Investment, in each case in accordance with the allocation provisions set
forth above.
(e) All remittances made by the Note Purchaser for funds
advanced under the Notes or by the Lessor for the funding of the Equity
Investment on each Funding Date other than a Base Lease Term Funding Date shall
be made on the relevant Funding Dates in immediately available federal funds by
wire transfer to the accounts specified in the Funding Notices. All remittances
received by the Conduit Agent from funds advanced under the Notes in the
principal amount of the Accreted Amount on each Base Lease Term Funding Date
shall be applied to the account of the Note Purchaser for a partial or total
offset (in the amount of such remittance) of the Interest Amount due on such
date.
(f) Each of the Funding Notices and each advance of funds made
on each Base Lease Term Funding Date shall be irrevocable and binding on the
Lessee and the Lessee shall indemnify the Note Purchaser (or the Liquidity
Banks, if applicable) and, with respect to the Initial Funding Date, the Lessor,
against any actual loss or expense incurred by the Note
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Purchaser (or the Liquidity Banks, if applicable) and the Lessor, as a result of
the Notes not being issued and/or funds not being advanced thereunder and the
Equity Investment not being funded in accordance therewith (other than as a
result of a breach of this Participation Agreement by the Note Purchaser, any
Liquidity Bank or the Lessor, as applicable) including any actual loss or
expense incurred by the Note Purchaser, the Liquidity Banks or the Lessor, as
the case may be, by reason of the liquidation or reemployment of funds or the
termination of any hedging arrangements acquired or requested by the Note
Purchaser, the Liquidity Banks and the Lessor, to fund the purchase of such
Notes and the funds to be advanced thereunder, and the Equity Investment.
Section 3.6 Use of Proceeds of Notes and Equity Investment. The
proceeds of the funds advanced under the Notes on the Initial Funding Date and
the Equity Investment funded on the Initial Funding Date shall be applied to
finance the Land Acquisition Costs. The proceeds of the funds advanced under the
Notes on any Interim Construction Period Funding Date or the Final Construction
Period Funding Date shall be applied to finance the Improvements Construction
Costs. The proceeds of the funds advanced under the Notes on any Base Lease Term
Funding Date shall, in the manner provided in Section 3.5(e) above, be used to
repay the then-accreted portion of the Outstanding Lease Balance occurring as a
result of the funding by the Lessee of the Security Deposit.
Section 3.7 Commitment of the Liquidity Banks and Letter of Credit
Issuer. Subject to the terms and conditions set forth herein and in the other
Operative Documents, (a) the Liquidity Banks shall severally, but not jointly,
make available Loans (as defined in the Liquidity Agreement) in an aggregate
principal amount not to exceed at any one time, $125,450,000, plus all accrued
discount on all related Commercial Paper (as such amount may be adjusted
pursuant to the Liquidity Agreement) less the aggregate principal amount of
outstanding Percentage Interest purchased by the Liquidity Banks pursuant to the
Asset Purchase Agreement, (b) the Letter of Credit Issuer shall issue the Letter
of Credit in the stated amount of not less than $6,656,037.11, and (c) each of
the Liquidity Banks and the Letter of Credit Issuer shall, at the times set
forth therein, duly perform their respective obligations set forth herein and
under the applicable Operative Documents to which such Person is a party.
ARTICLE IV
CALCULATION OF BASIC RENT AND SUPPLEMENTAL RENT;
DETERMINATION OF NOTE RATE; BREAKAGE
EXPENSES, INCREASED COSTS, ETC.; TAXES; FEES
Section 4.1 Rent.
(a) Basic Rent shall be equal to the sum of the Interest
Amount, the Yield Amount and the Support Amount. Basic Rent payable on each
Basic Rent Payment Date shall be equal to the sum of the Interest Amount, the
Yield Amount and the Support Amount payable on such date.
(b) Any Supplemental Rent payable pursuant to this
Participation Agreement and the other Operative Documents shall be paid
forthwith upon the determination thereof.
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(c) The Lessor Parties hereby acknowledge that the Notes and
the Equity Investment may be prepaid with the proceeds of the Supplemental Rent
payments due pursuant to the Master Lease, with the proceeds of such payments
applied in accordance with the provisions of Article XI hereof, subject in any
event to compliance with Section 4.3 hereof and to the timely application of
such Supplemental Rent pursuant to the relevant provisions of Article XI hereof.
Section 4.2 Calculation of Basic Rent.
(a) The Interest Amount portion of Basic Rent with respect to
the outstanding principal amount of the Notes shall be computed based upon one
of the rates set forth below:
(i) To the extent that the Note Purchaser is
funding advances under the Notes by issuance of Commercial Paper, the Interest
Amount portion of Basic Rent with respect to the amounts outstanding under the
Notes shall be computed based upon the CP Rate as in effect from time to time
plus fifteen one hundredths of one percent (.15%); and
(ii) To the extent the Note Purchaser is not
funding advances under the Notes by issuance of Commercial Paper or the Notes
have been purchased by the Liquidity Banks pursuant to the Liquidity
Documentation, the Interest Amount portion of Basic Rent with respect to the
amounts outstanding under the Notes shall be computed as follows: (A) until such
time as a Loan based upon a one (1) month LIBOR rate can be advanced by the
Liquidity Banks pursuant to the Liquidity Documents, the Alternate Rate, and (B)
thereafter, one of the following two rates as selected by the Note Purchaser (or
if the Notes have been purchased by the Liquidity Banks pursuant to the
Liquidity Documentation, the Agent) in its reasonable discretion: (x) the one
(1) month LIBOR rate as in effect from time to time (adjusted for reserve
requirements in effect on the first day of each period for which a payment is
due) plus the Applicable Margin; or (y) if the one (1) month LIBOR rate is not
available for any reason, the Alternate Rate.
The aggregate amount payable in accordance with this Section 4.2(a)
with respect to all Notes as of any Basic Rent Payment Date shall be the
"Interest Amount" payable as of such date.
(b) The Yield Amount portion of Basic Rent payable with
respect to the Equity Investment shall be computed based upon either (A) the one
(1) month LIBOR rate as in effect from time to time, adjusted for reserve
requirements in effect on the first day of each period for which a payment is
due, plus eight-tenths of one percent (.80%) or (B) if the one (1) month LIBOR
rate is not available or cannot be determined for the reasons set forth in
Section 4.5 herein, the Alternate Rate. Notwithstanding the foregoing, for the
period beginning on the Initial Funding Date and ending on the first Basic Rent
Payment Date, the Yield Amount portion of Basic Rent payable with respect to the
outstanding Equity Investment shall be computed based upon the Alternate Rate or
such other rate as agreed upon between the Lessee and the Lessor immediately
prior to the Initial Funding Date. The aggregate amount payable in accordance
with this Section 4.2(b) with respect to the Equity Investment as of any Basic
Rent Payment Date shall be the "Yield Amount" payable as of such date.
(c) The Support Amount portion of Basic Rent payable to the
Letter of Credit Issuer to compensate it for the issuance of the Letter of
Credit shall be equal to one-twentieth of
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one percent of the outstanding principal amount of the Notes. The aggregate
amount payable in accordance with this Section 4.2(c) as of any Basic Rent
Payment Date shall be the "Support Amount" payable as of such date.
(d) All calculations of Basic Rent shall be performed by the
Agent based on the information provided to it pursuant to Section 5.3. Such
information shall be provided to the Lessee and the Guarantor no later than 5:00
p.m., New York time, on the third (3rd) Business Day prior to the relevant Basic
Rent Payment Date, together with reasonable detail supporting the calculations
made. The Guarantor and Lessee shall promptly acknowledge receipt of such
calculations in writing to the Agent. Such calculations shall be deemed final in
the absence of manifest error. The Guarantor and the Lessee shall be entitled to
rely on any calculation of Basic Rent performed by the Agent, and to deal
directly with the Agent in connection with the verification of such
calculations.
(e) Except with respect to payments made pursuant to Sections
4.3, 4.4, 4.6, 13.1, 13.3 and 13.5, proceeds derived upon exercise of the
Remarketing Option or Unwind Proceeds (which shall be remitted to the Agent to
be distributed as provided in Article XI hereof), to the extent that a payment
of Basic Rent or Supplemental Rent is made other than on a Basic Rent Payment
Date, upon the request of the Lessee, the proceeds of any such payment (such
receipts, "Prepayments") shall be deposited in a special, segregated account
which shall be an Eligible Account held in the name of, and under the sole
dominion and control of the Agent (the "Prepayment Account").
Funds in the Prepayment Account shall be invested by
the Agent, at the direction and for the benefit of the Lessee, in Cash
Equivalents maturing no later than the next succeeding Basic Rent Payment Date.
The Agent is hereby authorized, in making or disposing of any investment
permitted by this Section, to deal with itself (in its individual capacity) or
with any one or more of its Affiliates, whether it or such Affiliate is acting
as an agent of the Agent or for any third person or dealing as a principal for
its own account; provided, however, that all such dealings between the Agent and
any one or more of its Affiliates shall be conducted on an arm's-length,
commercially reasonable basis.
The Lessee may, at its discretion, provide written
instructions to the Agent as to timing and application of moneys in the
Prepayment Account, so long as any money so withdrawn shall be used for the
payment of Rent. Absent any written instruction from the Lessee to the Agent or
if a Lease Default or a Lease Event of Default shall have occurred and be
continuing, the Agent shall withdraw money from the Prepayment Account and apply
such amount to the payment of Basic Rent and Supplemental Rent as such Rent
becomes due, but only to the extent that such Rent would otherwise, in the
ordinary course under the Operative Documents, be paid by the Lessee to the
Agent for application and allocation in accordance with the Operative Documents.
The Agent acknowledges and agrees that the Lessee and the Guarantor shall be
entitled to assume, and rely on such assumption, that the Agent will properly
apply and allocate any amount withdrawn from the Prepayment Account pursuant to
the Lessee's written instructions (if any, and absent any Lease Default or Lease
Event of Default) and the procedures and allocations under the Operative
Documents. Any amount remaining in the Prepayment Account upon the Lease
Termination Date and the full satisfaction of the
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Obligations under the Operative Documents shall be promptly withdrawn from the
Prepayment Account and returned to the Lessee.
Section 4.3 Breakage Expenses; Yield Maintenance Premium.
(a) If, with respect to the amounts outstanding under the
Notes or the outstanding portion of the Equity Investment, (i) interest or
principal is repaid or prepaid (including as a result of acceleration) in each
case (A) subject to Section 4.2(e) above, on a date other than a Basic Rent
Payment Date applicable thereto (including, without limitation, the Maturity
Date) or (B) in an amount other than the amount currently due, or (ii) Lessee
shall cancel or otherwise fail to consummate any funding requested under a
Funding Notice which has been delivered to the Agent (whether as a result of the
failure to satisfy any applicable conditions or otherwise) or shall fail to make
any prepayment after notice has been given to the Agent, then the Lessee shall
hold such Lessor Parties harmless from, and pay as Supplemental Rent to the
Agent for the benefit of such Lessor Parties, as their respective interests may
appear, within five (5) Business Days following demand therefor (which demand
shall be accompanied by one or more certificates contemplated by Section 4.3(c)
below), all actual costs and losses incurred by such Lessor Parties as a result
of such payment, cancellation or failure.
(b) Without duplication of the foregoing, and subject to
Section 4.2(e) above, in the event that any Lessor Party shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such party or the
termination of any hedging arrangements) to make, continue or maintain any
portion of the principal amount of its investment as the result of a breach by
the Lessee or the Guarantor under the Operative Documents, such Lessor Party
shall deliver a notice accompanied by a certificate as contemplated by Section
4.3(c) below, regarding such loss or expenses. The Lessee shall, within thirty
(30) days of receipt of such notice, pay directly to the Agent for the benefit
of such Lessor Party as Supplemental Rent, an amount, reasonably determined to
be equal to the excess, if any, of (A) the amount such Lessor Party would have
received if its investment had been made or continued based on the interest rate
borne by the relevant instrument over (B) the amount realized by such party from
reemploying the funds.
(c) A certificate (describing in reasonable detail the
calculation of the yield maintenance or other amount, as applicable, to be paid
under this Section 4.3) submitted by the applicable Lessor Party to the Lessee
(with a copy to the Agent) shall, absent demonstrable error, be final and
conclusive.
Section 4.4 Increased Costs, etc. If after the date hereof any change
in applicable law or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) (i) shall
subject any Lessor Party to, or increase the net amount of, any tax, levy,
impost, duty, charge, fee, deduction or withholding with respect to any Note,
Loan or the Equity Investment (or any portion thereof), or the funding of (or
agreement to provide funding for) such Notes, Loans or the Equity Investment, or
shall change the basis of taxation of payments to the Lessor Parties or any
other fees or amounts payable under the Operative Documents (other than (x) with
respect to the Lessor, any Taxes or other items specifically excluded from the
definition of Impositions, and (y) with respect to any Lessor Party other than
the Lessor, any Taxes (A)
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attributable to changes in the rate of general corporate, franchise, net income
or other income tax imposed on such Lessor Party by the jurisdiction in which
such Lessor Party either maintains its applicable lending office or is otherwise
subject to tax other than as a result of the transactions contemplated by the
Operative Documents or (B) that would not have been imposed but for the failure
of such Lessor Party to comply with any certification, information,
documentation or other reporting requirement), (ii) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, such Lessor
Party that would affect the amount of capital required or reasonably expected to
be maintained by such Lessor Party or any Person directly or indirectly
controlling such parties, and such Lessor Party reasonably and in good faith
determines that the rate of return on its or such controlling Person's capital
as a consequence of its obligations under or in respect of the Operative
Documents is reduced to a level below that which such party would have achieved
but for the occurrence of any such circumstance by an amount deemed by such
party to be material, or (iii) shall impose on such Lessor Party any other
condition (other than a condition involving administrative matters such as
additional reporting requirements to any such Governmental Authority) affecting
this Participation Agreement or any other Operative Document or the funding (or
agreement to provide funding hereunder), and the result of any of the foregoing
shall be to increase the cost to such Lessor Party of, or to reduce the amount
of any sum received or receivable by such Lessor Party in respect of, making,
continuing or maintaining (or its obligation to make, continue or maintain) its
investments in the respective instruments (or providing funding therefor) by an
amount reasonably determined in good faith by such Lessor Party to be material,
then the Lessee shall pay to the Agent for the benefit of the Lessor Party, as
Supplemental Rent, such additional amount or amounts, as will compensate such
Lessor Party on an After Tax Basis for such increase or reduction upon demand by
such party. Each such Lessor Party shall within thirty (30) days of such Lessor
Party's discovery of such event, notify the Lessee in writing of the occurrence
of any such event, such notice to state, in reasonable detail, the reasons
therefor and the calculation of the additional amount required fully to
compensate such party for such increased costs or reduced amount. Such
additional amount shall be payable by the Lessee to the Agent for the benefit of
such claiming party within fifteen (15) Business Days of its receipt of such
notice and such notice shall, in the absence of manifest error, be conclusive
and binding on the Lessee. Notwithstanding any other provision of this
Participation Agreement, any amount of Taxes that would, but for this sentence,
give rise to both Supplemental Rent payable to the Lessor pursuant to this
Section 4.4 and an indemnity payment obligation in favor of the Lessor pursuant
to Section 13.4 shall be governed solely by the provisions of Section 13.4;
provided, however, that this sentence is intended to apply Section 13.4 to Taxes
subject to an actual indemnity payment obligation pursuant to both Section 4.4
and Section 13.4, but not to diminish any claim for indemnification (or
Supplemental Rent) pursuant to this Section 4.4 that would not give rise to an
actual indemnity payment obligation pursuant to Section 13.4.
Section 4.5 Change of Circumstances.
(a) If, on or before the first day of any Rent Period, the
Lessor or any Liquidity Bank shall advise the Agent that the one (1) month LIBOR
rate cannot be adequately and reasonably determined due to the unavailability of
funds in or other circumstances generally affecting the London interbank market,
the Agent shall immediately give notice of such condition to the other
Transaction Parties. After the giving of any such notice (and until the
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Agent shall otherwise notify the Lessee that the circumstances giving rise to
such condition no longer exist), the rates to be paid by the Lessee pursuant to
Section 4.2(a)(ii) and 4.2(b) herein (as applicable) as of the first day of the
next Basic Rent Payment Date shall be the Alternate Rate.
(b) If, after the date of this Participation Agreement, as the
result of the adoption of any Requirement of Law, any change in any Requirement
of Law or the application or requirements thereof (whether such change occurs in
accordance with the terms of such Requirement of Law as enacted, as a result of
amendment or otherwise), any change in the interpretation or administration of
any Requirement of Law by any Governmental Authority, or any request or
directive (whether or not having the force of law) of any Governmental Authority
(each a "Change of Law"), it shall become unlawful or impossible for the Lessor
or any Liquidity Bank to fund or maintain its portion of the Outstanding Lease
Balance at the one (1) month LIBOR rate, such Person shall immediately notify
the Agent and the Agent shall immediately notify the other Transaction Parties
of such Change of Law. After the giving of any such notice (and until the Agent
shall otherwise notify the Lessee and the Lessor that such Change of Law is no
longer in effect), the one (1) month LIBOR rate shall be unavailable and the
rates to be paid by the Lessee pursuant to Section 4.2(a)(ii) and 4.2(b) herein
(as applicable) as of the next Basic Rent Payment Date shall be the Alternate
Rate.
Section 4.6 Taxes. All payments of Basic Rent, Supplemental Rent,
principal of, and interest or yield on, the Notes, the Loans and the Equity
Investment and all other amounts payable hereunder and under the Master Lease
shall be made free and clear of and without deduction for any present or future
income, excise, stamp, transfer or franchise taxes and other taxes, fees,
duties, withholdings or other charges of any nature whatsoever (including
interest and penalties) now or hereafter imposed by any Governmental Authority
or taxing authority thereof ("Taxes"), but excluding (x) with respect to the
Lessor, any Taxes or other items, in each case, specifically excluded from the
definition of Impositions, and (y) with respect to any Lessor Party other than
the Lessor, franchise taxes and other taxes imposed on or measured by the net
income of, as the case may be, of such Lessor Party (or its applicable lending
office) by its jurisdiction of incorporation or the jurisdiction in which it
maintains its applicable lending office (in each case, such non-excluded items
being called "Other Taxes"). In the event that any withholding or deduction from
any payment to be made by the Lessee hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Lessee will:
(a) pay as Supplemental Rent directly to the relevant
Governmental Authority or taxing authority the full amount required to be so
withheld or deducted;
(b) forward to the Agent for the benefit of the relevant
Lessor Party official receipts or other documentation reasonably satisfactory to
such Lessor Party evidencing such payment to such authority; and
(c) with respect to Other Taxes, pay to the Agent for the
benefit of the relevant Lessor Party such additional amount or amounts as is
necessary to ensure that the net amount actually received by such Lessor Party
will equal the full amount such Lessor Party would have received had no such
withholding or deduction been required.
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Moreover, if any Other Taxes are directly asserted against any Lessor
Party with respect to any payment received by such Lessor Party, such Lessor
Party may pay such Other Taxes and the Lessee will pay to the Agent for the
benefit of such Lessor Party, as Supplemental Rent, within fifteen (15) Business
Days after receipt of a written demand therefor (accompanied by a written
statement describing in reasonable detail the amount so payable) from such
Lessor Party such additional amounts (including any interest, reasonable
expenses and any penalties incurred in connection therewith) as are necessary in
order that the net after-tax amount received by such Person after the payment of
such Other Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had such Other Taxes not been asserted
plus interest on such additional amounts at the Alternate Rate calculated from
the date of payment of such Other Taxes by such Lessor Party to the date of
payment of such additional amounts by the Lessee.
If the Lessee fails to pay any Other Taxes when due to the appropriate
taxing authority or fails to remit to the Agent for the benefit of the relevant
Lessor Party the required receipts or other required documentary evidence, then
the Lessee shall indemnify such Lessor Party for any incremental Taxes,
interest, penalties and reasonable expenses that may become payable by such
Lessor Party as a result of any such failure.
Notwithstanding any other provision of this Participation Agreement,
any amount of Taxes that would, but for this sentence, give rise to both
Supplemental Rent payable to the Lessor pursuant to this Section 4.6 and an
indemnity payment obligation in favor of the Lessor pursuant to Section 13.4
shall be governed solely by the provisions of Section 13.4; provided, however,
that this sentence is intended to apply Section 13.4 to Taxes subject to an
actual indemnity payment obligation pursuant to both Section 4.6 and Section
13.4, but not to diminish any claim for indemnification (or Supplemental Rent)
pursuant to this Section 4.6 that would not give rise to an actual indemnity
payment obligation pursuant to Section 13.4.
Section 4.7 Replacement of Affected Parties.
(a) If any Liquidity Bank (an "Affected Party") makes demand
upon the Lessee for amounts pursuant to Section 4.3, 4.4 or 4.6 hereof, then the
Lessee may (x) request such Affected Party to, and such Affected Party shall
upon such request, use reasonable efforts to designate another lending office
acceptable to such Affected Party in its sole discretion for its investment
(with the object of avoiding the consequences of such events) or (y) give notice
(a "Replacement Notice") in writing to such Liquidity Bank, the Note Purchaser,
the Conduit Agent and the Agent of its intention to replace such Affected Party
with an Eligible Assignee designated in such Replacement Notice, if such
replacement would result in the elimination or reduction of charges similar to
those being claimed by the Affected Party. Any replacement of a Liquidity Bank
pursuant to the foregoing provisions must be acceptable to the Note Purchaser
and the Conduit Agent in their sole discretion (including, without limitation,
for Rating Agency concerns).
(b) The Note Purchaser and the Conduit Agent shall, in the
exercise of their sole discretion and within thirty (30) days of its receipt of
a Replacement Notice with respect to one of the Liquidity Banks, notify the
Lessee and the Affected Party whether the designated Eligible
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Assignee is satisfactory to the Note Purchaser and the Conduit Agent; and if
either shall fail to give such notice, the Eligible Assignee shall be deemed
rejected.
(c) Upon approval of the designated Eligible Assignee as
aforesaid, the Affected Party shall assign its rights and obligations under the
Operative Documents to such Eligible Assignee and, as a condition of such
assignment, the Affected Party shall receive payment in full of all outstanding
Loans and all other amounts due it under the Operative Documents.
(d) In the event the Note Purchaser and the Conduit Agent do
not approve the replacement of the Affected Party with the designated Eligible
Assignee, the Lessee shall have the option to designate another Eligible
Assignee pursuant to Section 4.7(a) and Section 4.7(b) above.
Section 4.8 Fees.
(a) The Lessee shall pay to the Agent for the benefit of the
Liquidity Banks a one-time upfront fee equal to (i) one basis point per
$1,000,000 of the Aggregate Note Purchase Commitment provided by each Liquidity
Bank other than KeyBank and (ii) for KeyBank, the amount as set forth in the
Proposal (the "Upfront Fees"). The Lessee shall pay the Upfront Fees in advance
on the Initial Funding Date as a Transaction Expense.
(b) The Lessee shall pay to the Agent, for the ratable benefit
of the Liquidity Banks to be paid pro rata based upon each Liquidity Bank's
Percentage, commitment fees (the "Commitment Fees") equal to thirty-five
one-hundredths of one percent (.35%) of the unused Aggregate Note Purchase
Commitment. The Lessee shall pay the Commitment Fees in arrears on each Basic
Rent Payment Date in each March, June, September and December (commencing on
March 12, 2001) and on the Maturity Date (or if the Overall Transactions are
terminated on a date prior to such date, on such prior date); provided, however,
the payment of Commitment Fees due on March 12, 2001 shall be prorated to
reflect the number of days from the Documentation Date to March 12, 2001. The
Commitment Fees shall constitute Supplemental Rent for the purposes of the
Operative Documents.
(c) The Lessee shall pay to the Agent for the benefit of the
Letter of Credit Issuer an annual issuance fee (the "Issuance Fee") equal to one
quarter of one percent (.25%) of the face amount of the Letter of Credit. The
Lessee shall pay the Issuance Fee in arrears in four installments on each Basic
Rent Payment Date in each March, June, September and December (commencing on
March 12, 2001) and on the Maturity Date (or if the Overall Transactions are
terminated on a date prior to such date, on such prior date). The Issuance Fee
shall constitute Supplemental Rent for the purposes of the Operative Documents.
(d) The Lessee shall pay to the Agent for the benefit of the
Structuring Agent a one-time structuring fee (the "Structuring Fee") as set
forth in the Proposal. The Lessee shall pay the Structuring Fee in advance on
the Initial Funding Date as a Transaction Expense.
Section 4.9 Calculation of Interest and Fees. All calculations of the
Interest Amount, the Yield Amount, any other forms of interest or fees under
this Participation Agreement and the other Operative Documents for any period,
unless otherwise specified herein or therein, shall (a) include the first day of
such period and exclude the last day of such period and (b) be calculated
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on the basis of a year of 360 days for actual days elapsed, except that during
any period any of the foregoing amounts is calculated based upon the Alternate
Rate, such amount shall be calculated on the basis of a year of 365 or 366 days,
as appropriate, for actual days elapsed.
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
Section 5.1 Nature of Transaction.
(a) The parties hereto intend that, with respect to the
Property and the Master Lease, (i) for financial accounting purposes with
respect to the Lessee, (x) the Master Lease will be treated as an "operating
lease" pursuant to Statement of Financial Accounting Standards (SFAS) No. 13, as
amended, (y) the Lessor will be treated as the owner and the lessor of the
Property to which it holds title subject to the Master Lease and the Lessee will
be treated as the lessee of the Property, (ii) for federal and all state and
local income tax purposes and bankruptcy purposes, (A) the Master Lease will be
treated as a financing arrangement, (B) the Note Purchaser with respect to the
Notes and the Lessor with respect to the Equity Investment will be deemed to be
lenders making loans to the Lessee in an aggregate amount equal to the
Outstanding Lease Balance, which loans are secured, inter alia, by the Property
subject to the Master Lease, and (C) the Lessee under the Master Lease will be
treated as the owner of the Property and will be entitled to all tax benefits
ordinarily available to an owner of property like such Property for such tax
purposes, and (iii) all risks relating to environmental matters shall be borne
by the Lessee in accordance with the provisions of this Participation Agreement,
the Construction Agency Agreement and the Environmental Indemnity Agreement.
(b) The parties hereto intend that, for federal, state, local
and foreign tax and regulatory purposes, the Notes and the Equity Investment
will be Indebtedness of the Lessee secured, inter alia, by the Property and the
rights to payment of Rent under the Master Lease, and agree to treat the Notes
and the Equity Investment accordingly for all such purposes.
(c) Notwithstanding anything else to the contrary set forth
herein, each Transaction Party acknowledges and agrees that none of the other
Transaction Parties has made any representations or warranties concerning the
tax, accounting or (except as otherwise expressly contained in this
Participation Agreement or other Operative Documents) legal characteristics of
the Operative Documents and that each Transaction Party, respectively, has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate.
(d) Specifically, without limiting the generality of the
foregoing, the parties hereto intend and agree that in the event of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statutes of the
United States of America or any state or commonwealth thereof affecting the
Lessee or any other Transaction Party or any collection actions, the
transactions evidenced by the Operative Documents are loans made to the Lessee
by the Lessor (using its own funds as well as funds provided by the Note
Purchaser and/or the Liquidity Banks as unrelated third party lenders).
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Section 5.2 Amounts Due Under the Master Lease. Anything else herein or
elsewhere to the contrary notwithstanding, it is the intention of the
Transaction Parties that: (i) the amount and timing of installments of Basic
Rent due and payable from time to time from the Lessee under the Master Lease
shall be equal to the aggregate payments due and payable in respect of the
amounts outstanding under the Notes and the outstanding portion of the Equity
Investment on each Basic Rent Payment Date then due and payable; (ii) if the
Lessee elects to purchase all of the Property under the Master Lease or becomes
obligated to purchase all of the Property pursuant thereto, the Outstanding
Lease Balance, all accrued and unpaid Basic Rent, Supplemental Rent and all
other obligations of the Lessee owing to the Lessor Parties or any other Person
under the Operative Documents shall be paid in full by the Lessee; and (iii) if
the Lessee properly elects the Remarketing Option under the Master Lease, the
Lessee shall only be required to pay to the Lessor the Gross Remarketing
Proceeds of the sale of the Property, the corresponding Maximum Recourse Amount
and any amounts due pursuant to Articles XI and XIII hereof and Section 18.3 of
the Master Lease (subject to Section 18.3(n) of the Master Lease) (which
aggregate amount may be less than the Outstanding Lease Balance); and (iv) upon
a Lease Event of Default resulting in the obligations of the Lessee becoming due
and payable, the amounts then due and payable by the Lessee under the Master
Lease shall include all amounts necessary to pay in full the Outstanding Lease
Balance, plus all accrued and unpaid Rent (including, without duplication,
Supplemental Rent) plus all other amounts then due from Lessee to the Lessor
Parties, or any other Person under the Operative Documents. Amounts payable to
the Lessor pursuant to Section 5.2(ii) or (iii) hereof shall be remitted to the
Agent upon receipt by the Lessee and shall be applied upon receipt thereof in
accordance with the provisions of Article XI hereof.
Section 5.3 Allocation of Payment Obligations; Payment to Agent.
(a) The Note Purchaser, the Lessor and the Letter of Credit
Issuer shall submit to the Agent no later than 5:00 p.m., New York time, on the
fourth (4th) Business Day prior to each Basic Rent Payment Date, a summary of
the Basic Rent payments due in respect of the amounts outstanding under the
Notes and the outstanding portion of the Equity Investment, together with
reasonable detail supporting the calculations made. The Agent shall prepare and
distribute to the Note Purchaser, the Lessor, the Letter of Credit Issuer, the
Lessee and the Guarantor, no later than three (3) Business Days prior to each
Basic Rent Payment Date, an invoice with respect to the Basic Rent payable as of
such date, which invoice shall set forth, inter alia, the aggregate amount of
Basic Rent payable by the Lessee as of the upcoming Basic Rent Payment Date
together with a detailed description of the allocation of Basic Rent to each
outstanding type of instrument, with such amounts further allocated to reflect
the amounts payable by the Lessee and the interest rates payable on such
instrument. Such invoice shall further specify the relevant payment
instructions. Notwithstanding the foregoing, any delay or failure on the part of
the Agent to deliver the invoice shall neither extinguish nor diminish Lessee's
obligations to pay the Basic Rent due and payable on the applicable Basic Rent
Payment Date.
(b) Except as otherwise expressly set forth in this
Participation Agreement or any other Operative Documents, all payments to be
made by the Lessee or any other Lessee Party shall be paid to the Agent for the
benefit of, and disbursement to, the Lessor Party for whose account such payment
has been made, and payment to the Agent, shall, as between such Lessee Party and
such Lessor Party, constitute payment to such Lessor Party.
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ARTICLE VI
CONDITIONS PRECEDENT TO
FUNDING DATES
Section 6.1 Conditions Precedent to the Initial Funding Date. The
obligation of the Lessor to issue the Notes specified in Section 3.1 and the
Note Purchaser to fund advances thereunder and the Lessor to fund the Equity
Investment specified in Section 3.2, the Note Purchaser (or the Liquidity Banks
if the Note Purchaser does not) to purchase such Notes and fund amounts
thereunder or Percentage Interests, the obligation of the Lessor to acquire the
Land, the obligation of the Letter of Credit Issuer to issue the Letter of
Credit and the obligation of the Lessee to enter into the Master Lease are
subject to the satisfaction (or waiver by the appropriate Lessor Parties) of
each of the following conditions precedent (such satisfaction or waiver to be
evidenced by the purchase of the Notes and the funding of the advances
thereunder, and funding of the Equity Investment on the Initial Funding Date
unless otherwise documented in writing by the appropriate parties):
(a) Funding Notice. The Agent, for the benefit of the Lessor
Parties, shall have received a fully executed counterpart of the Initial Funding
Notice substantially in the form of Exhibit B-1 attached hereto with respect to
the issuance of the Notes and the funding of the advances thereunder, and the
funding of the Equity Investment to finance the Land Acquisition Costs. The
delivery of such Funding Notice and the acceptance by the Lessee of the proceeds
of the initial funds advanced under the Notes by the Note Purchaser and the
Equity Investment described therein shall constitute a representation and
warranty by the Lessee that on such Funding Date (both immediately before and
after giving effect to such advances under the Notes and the Equity Investment
and the application of the proceeds thereof), the statements made in Section 7.1
and 7.2 are true and correct in all material respects.
(b) Operative Documents to be Delivered on the Initial Funding
Date.
(i) Master Lease. The Lessee and the Lessor
shall have duly executed and delivered the Master Lease in the form of Exhibit C
attached hereto, such Master Lease to be dated as of the Initial Funding Date.
(ii) Construction Agency Agreement. The
Construction Agent and the Lessor shall have duly executed and delivered the
Construction Agency Agreement in the form of Exhibit D attached hereto, such
Construction Agency Agreement to be dated as of the Initial Funding Date, and
all conditions therein required to be satisfied prior to commencement of the
construction of the Improvements shall have been satisfied.
(iii) Guaranty. The Guarantor shall have duly
authorized, executed and delivered by the Guaranty in the form of Exhibit E
attached hereto, with respect to the guaranty by the Guarantor of obligations of
the Lessee under the Operative Documents, such Guaranty to be dated as of the
Initial Funding Date.
(iv) Environmental Indemnity Agreement. The
Lessee shall have duly authorized, executed and delivered the Environmental
Indemnity Agreement in the form of
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Exhibit F attached hereto, such Environmental Indemnity Agreement to be dated as
of the Initial Funding Date.
(c) Memorandum of Lease. The Memorandum of Lease substantially
in the form of Exhibit G attached hereto, shall have been executed and delivered
by the Lessee and Lessor, such Memorandum of Lease to be dated as of the Initial
Funding Date.
(d) Precautionary Deed of Trust. The Precautionary Deed of
Trust substantially in the form of Exhibit H attached hereto shall have been
executed and delivered by the Lessee, such document to be dated as of the
Initial Funding Date.
(e) Deed of Trust. The Lessor shall have executed and
delivered the Deed of Trust to the Agent substantially in the form of Exhibit I
attached hereto, such instrument to be dated as of the Initial Funding Date.
(f) Opinion of Counsel to Lessee and Guarantor. The Agent on
behalf of the Lessor Parties shall have received an opinion of Perkins Coie LLP,
counsel to the Lessee and the Guarantor, to be dated as of the Initial Funding
Date, as to the matters set forth in Exhibit J, which opinion shall be
acceptable in form and substance to the Lessor Parties. By its execution hereof,
each of the Lessee and the Guarantor expressly instruct such counsel to execute
and deliver such opinion to the Persons designated in the preceding sentence
and, if requested by the Note Purchaser or the Liquidity Banks, the Rating
Agencies.
(g) Initial Appraisal. The Agent on behalf of the Lessor
Parties shall have received the Initial Appraisal of the Property dated as of a
date that is satisfactory to the Lessor Parties and in form and substance
satisfactory to the Lessor Parties in their sole discretion.
(h) Environmental Audit. The Agent on behalf of the Lessor
Parties shall have received the results of an Environmental Audit with respect
to the Property which is dated no earlier than thirty (30) days prior to the
Initial Funding Date, which Environmental Audit shall be satisfactory in form
and substance to the Lessor Parties in their sole discretion.
(i) Conveyance Instruments. On or prior to the Initial Funding
Date, the Agent on behalf of the Lessor Parties shall have received evidence
satisfactory to them that appropriate Conveyance Instruments have been executed
and delivered and, if deemed necessary or desirable by any such Person or its
counsel, recorded in such jurisdictions as such Person may request, in order to
properly convey fee title to the Property to the Lessor and (y) perfect the
interests of the Agent in the Master Lease and the Property.
(j) Matters with Respect to the Construction of the
Improvements
(i) Construction Contract. The Construction
Contract shall have been duly executed and delivered by the parties thereto, and
all conditions therein required to be satisfied prior to commencement of the
construction of the Improvements shall have been satisfied.
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(ii) Budget. The Budget shall have been delivered
to the Agent on behalf of the Lessor Parties and the Construction Agent shall
have identified the funding sources with respect to all Budget items.
(iii) Evidence of Access to Utilities. The
Construction Agent shall have delivered to the Agent on behalf of the Lessor
Parties evidence of the availability, capacity and suitability of electric, gas,
telephone, water, sanitary sewer and storm water drainage services with respect
to Property.
(iv) No Flood Hazard Area. The Construction Agent
shall have delivered to the Agent on behalf of the Lessor Parties evidence that
the Improvements are not being built in a special flood hazard area.
(v) Permits. The Construction Agent shall have
delivered to the Agent on behalf of the Lessor Parties copies of all
certificates, permits, licenses or other authorizations (including confirmation
of zoning compliance) which are necessary to have been obtained in connection
with the commencement of the construction of the Improvements.
(vi) Absence of Condemnation or Similar
Proceedings. The Construction Agent shall have delivered to the Agent on behalf
of the Lessor Parties evidence to the effect that no part of the Property has
been taken in condemnation or other similar proceedings (and that no such
proceedings are pending or shall have been notified to any of the Construction
Agent, the Lessee or the Guarantor).
(vii) Assignment of Construction Agreements and
Contractor's Consent to Assignment, The Lessee shall have duly executed and
delivered the Assignment of Construction Agreements substantially in the form of
Exhibit K attached hereto and shall also have delivered to the Agent on behalf
of the Lessor Parties a Contractor's Consent to Assignment executed by the
Contractor, substantially in the form attached to the Assignment of Construction
Agreements.
(viii) Evidence of Insurance Required by
Construction Contract. The Agent on behalf of the Lessor Parties shall have
received evidence that Required Builder's Risk Insurance required to be
maintained with respect to the construction of the Improvements pursuant to the
Construction Contract is in full force and effect.
(ix) Evidence of Additional Insurance During
Construction Period. The Agent on behalf of the Lessor Parties shall have
received evidence that the Additional Construction Period Insurance is in full
force and effect.
(x) Evidence of Acceptable Construction Period
Title Coverage. The Agent on behalf of the Lessor Parties shall have received
evidence of the issuance and effectiveness of Title Policies which provide,
inter alia, for title insurance covering amounts acceptable to the Lessor
Parties in their reasonable discretion.
(k) The Lessee's Responsible Officer's Certificate. The Agent
on behalf of the Lessor Parties shall have received a Responsible Officer's
Certificate of the Lessee, substantially in the form of Exhibit L attached
hereto, dated as of the Initial Funding Date, stating that to such
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Responsible Officer's knowledge (i) each and every representation and warranty
of the Lessee contained in each Operative Document to which it is a party is
true and correct in all material respects on and as of the Initial Funding Date,
except to the extent such representation or warranty relates solely to an
earlier date, in which case such representation or warranty shall have been true
and correct on and as of such earlier date, (ii) no Lease Default or Lease Event
of Default has occurred and is continuing, (iii) each Operative Document to
which the Lessee is a party is in full force and effect with respect to it, and
(iv) the Lessee has duly performed and complied with all conditions contained
herein or in any other Operative Document required to be performed or complied
with by it on or prior to such Initial Funding Date.
(l) Guarantor's Responsible Officer's Certificate. The Agent
on behalf of the Lessor Parties shall have received a Responsible Officer's
Certificate of the Guarantor in substantially the form of Exhibit M attached
hereto, dated as of the Initial Funding Date stating that to such Responsible
Officer's knowledge (i) each and every representation and warranty of the
Guarantor contained in each Operative Document to which it is a party is true
and correct in all material respects on and as of the Initial Funding Date,
except to the extent such representation or warranty relates solely to an
earlier date, in which case such representation or warranty shall have been true
and correct on and as of such earlier date, (ii) no Lease Default or Lease Event
of Default has occurred and is continuing, (iii) each Operative Document to
which the Guarantor is a party is in full force and effect with respect to it,
and (iv) the Guarantor has duly performed and complied with all conditions
contained herein or in any other Operative Document required to be performed or
complied with by it on or prior to such Initial Funding Date.
(m) UCC Financing Statements. On or prior to the Initial
Funding Date, the Lessee shall have delivered to the Agent on behalf of the
Lessor Parties all UCC Financing Statements relating to the Property and other
security interests granted under the Operative Documents, as the Lessor Parties
may reasonably request in order to protect the interests of the Lessor Parties
under the Operative Documents to the extent the Master Lease, Memorandum of
Lease, Precautionary Deed of Trust, Deed of Trust, Conveyance Instruments or
other Operative Documents constitute security agreements.
(n) Recordation of Conveyance Instruments and Financing
Statements. The Agent on behalf of the Lessor Parties shall have received
evidence reasonably satisfactory to each of them that (i) the Memorandum of
Lease, (ii) the Precautionary Deed of Trust, (iii) the Deed of Trust, and (iv)
the UCC Financing Statements have been or are being recorded in a manner
sufficient to properly perfect each of their respective interests therein.
(o) Property Survey. On or prior to the Initial Funding Date,
the Lessee shall have delivered to Agent on behalf of the Lessor Parties copies
of the ALTA/1997 (Urban) Survey with respect to the unimproved Property (the
"ALTA Land Survey"), which survey shall be reasonably satisfactory to the Lessor
Parties.
(p) Title Policies. On or prior to the Initial Funding Date,
the Lessee shall have delivered to the Agent on behalf of the Lessor Parties a
commitment from the Title Company to deliver (x) an ALTA extended owner's title
insurance policy covering the Property in favor of the Lessor and (y) ALTA
extended lender's title insurance policies covering the Property in
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favor of the Lessor and the Agent. The owner's policy described in clause (x)
shall (i) be subject only to Permitted Exceptions, (ii) be in an amount not less
than the Aggregate Commitment Amount, (iii) be reasonably satisfactory to the
Lessor Parties and (iv) contain comprehensive, mechanics liens, zoning,
recharacterization endorsements, pending disbursements endorsements and such
other endorsements reasonably requested by the Lessor Parties. The lender's
policy described in clause (y) shall (i) be subject only to Permitted
Exceptions, (ii) be in an amount not less than the Aggregate Commitment Amount,
(iii) be reasonably satisfactory to the Lessor Parties and (iv) contain
revolving credit, variable rate, comprehensive, fraudulent conveyances, doing
business, mechanics liens, zoning, pending disbursement endorsements and such
other endorsements reasonably requested by the Lessor Parties.
(q) Evidence of Property Insurance. The Agent on behalf of the
Lessor Parties shall have received evidence that the insurance maintained by the
Lessee with respect to the Property as of the Initial Funding Date satisfies the
requirements set forth in Article XIII of the Master Lease, setting forth the
respective coverage, limits of liability, carrier, policy number and period of
coverage.
(r) Governmental Approvals. All necessary Governmental Actions
required by any Requirement of Law for the purpose of (i) authorizing the Lessor
to enter into the transactions contemplated by the Operative Documents as of the
Initial Funding Date, or (ii) authorizing the Lessee or the Guarantor to execute
and deliver the Operative Documents to which it is a party and perform its
obligations thereunder, shall have been obtained or made and be in full force
and effect.
(s) Requirements of Law. The transactions contemplated by the
Operative Documents do not and will not violate any Requirement of Law and do
not and will not subject the Transaction Parties to any adverse regulatory
prohibitions or constraints.
(t) No Lease Event of Default. There shall not have occurred
and be continuing any Lease Default or Lease Event of Default, and no Lease
Default or Lease Event of Default will have occurred after giving effect to the
issuance of the Notes and the funding of the advances thereunder, the purchase
thereof by the Note Purchaser or the Liquidity Banks as of the Initial Funding
Date, or the funding of the Equity Investment as of the Initial Funding Date.
(u) Administration Agreement. The Administration Agreement
shall have been executed and delivered by all parties thereto substantially in
the form of Exhibit N attached hereto.
(v) Representation and Warranties. On the Initial Funding
Date, the representations and warranties of the Lessee and the Guarantor
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 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.
(w) Litigation. On the Initial Funding Date, there shall not
be any actions, suits or proceedings pending or, to the knowledge of the Lessee
or the Guarantor, threatened with respect
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to the Lessee, the Guarantor or the Property (i) that are reasonably likely to
reduce the Fair Market Value of the Property or the ability of the Lessee or the
Guarantor to fulfill their obligations under the Operative Documents or have a
material adverse effect on the title to, or the use or operation of all or any
portion of the Property or (ii) that question the validity of the Operative
Documents or the rights or remedies of the Lessor Parties with respect to the
Lessee, the Guarantor or the Property under the Operative Documents.
(x) Available Commitments; Maximum Amount of Notes and Equity
Investment. After giving effect to the purchase of the Notes and the funding of
the advances thereunder, and the funding of the Equity Investment requested to
be issued and made pursuant to the Funding Notice delivered as of the Initial
Funding Date, and the application of the proceeds thereof to the acquisition of
the Land and the commencement of construction of the Improvements, the
Outstanding Lease Balance shall not exceed the Aggregate Commitment Amount.
(y) Taxes. All taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of the
Operative Documents to be delivered as of the Initial Funding Date shall have
been paid or provisions for such payment shall have been made by the Lessee to
the reasonable satisfaction of the Lessor Parties.
(z) No Material Adverse Effect. After giving effect to the
purchase of the Notes and the funding of the advances thereunder, and the
funding of any portion of the Equity Investment, there shall be no change with
respect the Property or the financial condition of the Lessee or the Guarantor
that would have a Material Adverse Effect.
(aa) Fees. The Agent on behalf of each Liquidity Bank, the
Letter of Credit Issuer and the Structuring Agent shall have received from the
Lessee fees in the amounts required pursuant to Section 4.8 hereof.
(bb) Other Documents. The Lessee and the Guarantor shall have
delivered or caused to be delivered such other documents as the Lessor Parties
may reasonably request.
Section 6.2 Conditions Precedent to all Interim Construction Period
Funding Dates (Except the Final Construction Period Funding Date). The
obligation of the Lessor to issue the Notes and to fund the advances thereunder
with respect to the funding of the interim advances to finance the construction
of the Improvements during the Construction Period and up to ninety (90) days
after the Construction Period are subject to the satisfaction (or waiver by the
appropriate Lessor Parties) of each of the following conditions precedent (such
satisfaction or waiver to be evidenced by the funding of such advances under the
Notes on such Funding Date unless otherwise documented in writing by the
appropriate parties):
(a) Interim Funding Notice. The Agent, on behalf of the Lessor
Parties, shall have received a fully executed counterpart of an Interim Funding
Notice substantially in the form of Exhibit B-2 hereto (including all
attachments thereto), executed by the Lessee, in accordance with Section 3.5
hereof. The delivery of such Interim Funding Notice shall constitute a
representation and warranty by the Lessee that on such Interim Construction
Period Funding Date (both immediately before and after giving effect to the
funding of such advances under the
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Notes and the application of the proceeds thereof), the statements made in
Section 7.2 hereof are true and correct in all material respects.
(b) Title Policy Endorsement. On or prior to each Interim
Construction Period Funding Date, there shall have been delivered a commitment
from the Title Company to deliver an endorsement with respect to the ALTA
extended lender's title insurance policy insuring the priority of advances made
in the amount requested in the Interim Funding Notice as of such Funding Date in
favor of the Lessor and the Agent.
(c) Affidavits; Lien Waivers. To the extent required to obtain
the commitment of the Title Company described in Section 6.2(b), executed
interim affidavits and interim lien waivers, indicating the aggregate amount for
which each contractor, subcontractor, architect, engineer, material supplier or
other Person who has supplied labor, materials or services for the construction
of the Improvements has delivered lien waivers (including the present and all
prior lien waivers) and the incremental amount by which such amount has
increased from the immediately preceding lien waiver delivered by such Person
and otherwise in form and substance reasonably satisfactory to the Construction
Agent and the Title Company from the Contractor and such other parties who have
furnished materials or services or performed labor of any kind in connection
with the construction of the Improvements as deemed reasonably necessary by the
Construction Agent, together with a cumulative lien waiver log in form and
substance reasonably satisfactory to the Construction Agent.
(d) Updated Budget. An updated Budget, if any material changes
shall have occurred with respect to the current and prospective expenditures.
(e) Statement Regarding Costs. A statement reflecting (i) the
aggregate costs of all labor, materials, equipment and fixtures incurred and to
be incurred, trade by trade, which are necessary for completion of construction
of the Improvements prepared by the Construction Agent and (ii) certain costs
(other than as described in the immediately preceding clause) of completion of
the Improvements, including apportioned amounts of architects', engineers',
interest on and recording taxes and title charges in respect of project loan
mortgages, real estate taxes, water and sewer rents, survey costs, loan
commitment fees, insurance and bond premiums and other non-construction costs as
are part of the "cost of improvement", prepared by the Construction Agent.
(f) Proof of Payment. Upon request of any Lessor Party, proof
of payment of all items for which disbursements have been made.
Section 6.3 Conditions Precedent to Final Construction Period Funding
Date. The obligation of the Lessor to fund the advance under the Notes
constituting the final advance with respect to the completion of construction of
the Improvements is subject to the satisfaction (or waiver by the appropriate
Lessor Parties) of each of the following conditions precedent (such satisfaction
or waiver to be evidenced by the funding of the advances under the Notes on such
Funding Date unless otherwise documented in writing by the appropriate parties):
(a) Final Funding Notice. The Lessor Parties shall each have
received a fully executed counterpart of the Final Funding Notice substantially
in the form of Exhibit B-3 hereto
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(including all attachments thereto), in accordance with Section 3.5 hereof. The
delivery of such Funding Notice and the acceptance by the Lessor of the proceeds
thereof shall constitute a representation and warranty on such Funding Date
(both immediately before and after giving effect to the funding of the advances
under the Notes and the application of the proceeds thereof), the statements
made in Section 7.2 hereof are true and correct in all material respects.
(b) Completion. Final Completion shall be deemed to have
occurred pursuant to the Construction Agency Agreement.
(c) Lessee's Responsible Officer's Certificate. The Agent on
behalf of the Lessor Parties shall each have received a Responsible Officer's
Certificate of the Lessee, in substantially the form of Exhibit M attached
hereto, dated as of such Funding Date, stating that to such Responsible
Officer's knowledge (i) each and every representation and warranty of the Lessee
contained in each Operative Document to which it is a party is true and correct
in all material respects on and as of such Funding Date, except to the extent
such representation or warranty relates solely to an earlier date, in which case
such representation or warranty shall have been true and correct in all material
respects on and as of such earlier date, (ii) no Lease Default or Lease Event of
Default has occurred and is continuing, (iii) each Operative Document to which
the Lessee is a party is in full force and effect with respect to it; and (iv)
the Lessee has duly performed and complied in all material respects with all
conditions contained herein or in any other Operative Document required to be
performed or complied with by it on or prior to such Funding Date.
(d) Guarantor's Responsible Officer's Certificate. The Agent
on behalf of the Lessor Parties shall each have received a Responsible Officer's
Certificate of the Guarantor in substantially the form of Exhibit N attached
hereto, dated as of such Funding Date, stating that (i) to such Responsible
Officer's knowledge each and every representation and warranty of the Guarantor,
contained in each Operative Document to which it is a party is true and correct
in all material respects on and as of such Funding Date, except to the extent
such representation or warranty relates solely to an earlier date, in which case
such representation or warranty shall have been true and correct in all material
respects on and as of such earlier date, (ii) to such Responsible Officer's
knowledge, no Lease Default or Lease Event of Default has occurred and is
continuing, (iii) to such Responsible Officer's knowledge each Operative
Document to which Guarantor is a party is in full force and effect with respect
to it; and (iv) to the best of such Responsible Officer's knowledge, Guarantor
has duly performed and complied in all material respects with all conditions
contained herein or in any other Operative Document required to be performed or
complied with by it on or prior to such Funding Date.
(e) Property Survey and Plans. On or prior to such Funding
Date, the Lessee shall have delivered to the Agent on behalf of the Lessor
Parties an original copy of the "as-built" plat of survey and the final
"as-built" Plans in satisfaction of clauses (1) and (2) of Section 5.3(f) of the
Construction Agency Agreement.
(f) Title Policy. On or prior to such Funding Date, the Lessee
shall have delivered to the Agent on behalf of the Lessor Parties a commitment
from the Title Company to reissue (x) the ALTA extended owner's title insurance
policy insuring the Lessor covering the Land and the Improvements as built and
(y) the ALTA extended lender's title insurance policies
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insuring the Lessor and the Agent covering the Land and the Improvements as
completed. The owner's policy described in clause (x) shall (i) be subject only
to Permitted Exceptions, (ii) be in an amount not less than the Outstanding
Lease Balance, (iii) be reasonably satisfactory to the Lessor Parties and (iv)
contain comprehensive, mechanics liens, zoning endorsements and such other
endorsements reasonably requested by any Lessor Party. The lender's policies
described in clause (y) shall (i) be subject only to Permitted Exceptions, (ii)
be in an amount not less than the Outstanding Lease Balance, (iii) be reasonably
satisfactory to any of the Lessor Parties and (iv) contain revolving credit,
variable rate, usury, comprehensive, fraudulent conveyances, recharacterization,
doing business, mechanics liens, zoning endorsements and such other endorsements
reasonably requested by any Lessor Party.
(g) Evidence of Property Insurance. The Agent on behalf of the
Lessor Parties shall have received evidence that the insurance maintained by the
Lessee with respect to the Property as of such Funding Date satisfies the
requirements set forth in Article XIII of the Master Lease, setting forth the
respective coverage, limits of liability, carrier, policy number and period of
coverage.
(h) Governmental Approvals. All necessary Governmental Actions
required by any Requirement of Law for the purpose of completing and commencing
commercial operation of the Property shall have been obtained or made and be in
full force and effect.
(i) No Lease Event of Default. There shall not have occurred
and be continuing any Lease Default or Lease Event of Default, and no Lease
Default or Lease Event of Default will have occurred after giving effect to the
funding of the advances under the Notes on such Funding Date.
(j) Representation and Warranties. On such Funding Date, the
representations and warranties of the Lessee contained herein and in each of the
other Operative Documents with respect to the Property shall be true and correct
in all material respects as though made on and as of such date, except to the
extent such representations or warranties relate solely to an earlier date, in
which case such representations and warranties shall have been true and correct
in all material respects on and as of such earlier date.
(k) Litigation. On such Funding Date, there shall not be any
actions, suits or proceedings pending or, to the knowledge of the Lessee,
threatened with respect to the Lessee or the Property (i) that are reasonably
likely to reduce the Fair Market Value of the Property to an amount less than
the Outstanding Lease Balance or have a material adverse effect on the title to,
or the use or operation of the Property or (ii) that question the validity of
the Operative Documents or the rights or remedies of the Lessor or the Agent
with respect to the Lessee or the Property under the Operative Documents.
(l) Other Documents. The Lessee and the Guarantor shall have
delivered or caused to be delivered such other documents as the Lessor Parties
may reasonably request.
Section 6.4 Conditions Precedent to all Base Lease Term Funding Dates.
The obligation of the Lessor to fund the advances under the Notes with respect
to the funding of the Accreted Amounts are subject to the satisfaction (or
waiver by the appropriate Lessor Parties) of each of
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the following conditions precedent (such satisfaction or waiver to be evidenced
by the funding of the advances under the Notes on such Funding Date unless
otherwise documented in writing by the appropriate parties):
(a) Representations and Warranties. The representations and
warranties of the Guarantor and the Lessee set forth in the Operative Documents
(including the representations and warranties set forth in Sections 7.1 and 7.2)
shall be true and correct in all material respects on and as of such Funding
Date except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects on and as of such earlier date. The
acceptance by the Lessor of the proceeds of such funding shall constitute a
representation and warranty on such Funding Date (both immediately before and
after giving effect to the funding of such advances under the Notes and the
application of the proceeds thereof), the statements made in Section 7.2 hereof
are true and correct in all material respects.
(b) No Lease Event of Default. No Lease Event of Default has
occurred and is continuing or will result from such funding.
(c) Operative Documents. All of the Operative Documents are in
full force and effect.
Section 6.5 Closing. All documents, instruments and agreements required
to be delivered on the Initial Funding Date shall be delivered to the offices of
Orrick, Herrington & Sutcliffe LLP, 400 Sansome Street, San Francisco,
California 94111, or at such other location as may be determined by the
Transaction Parties.
ARTICLE VII
REPRESENTATIONS
Section 7.1 Representations and Warranties of the Lessee and the
Guarantor. Each of the Guarantor and the Lessee hereby represents and warrants,
as of the Initial Funding Date, to the Lessor Parties as follows:
(a) Corporate Authority.
(i) Incorporation; Good Standing. Each of the
Guarantor and the Lessee (A) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, (B) has all requisite corporate power and authority and legal
right to own and operate its property, as to the Lessee, to lease the property
it operates as lessee, and to conduct its business as now conducted and as
presently contemplated, and (C) is in good standing as a foreign corporation and
is duly authorized to do business in each jurisdiction where such qualification
is necessary except where a failure to be so qualified would not have a Material
Adverse Effect. Except as provided in Subsection (c)(iv) hereof, the Lessee and
the Guarantor each has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its
Obligations under the Operative Documents to which it is a party and, as to the
Lessee, to own and hold under lease its rights in the Property and to conduct
its business substantially as currently conducted by it.
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(ii) Authorization. The execution, delivery and
performance of this Participation Agreement and the other Operative Documents to
which it is a party and the transactions contemplated hereby and thereby (A) are
within its corporate authority and legal right, (B) have been duly authorized by
all necessary corporate proceedings, (C) do not conflict with or result in any
breach or contravention of any provision of law, statute, rule or regulation to
which it is subject or any judgment, order, writ, injunction, license or permit
applicable to it which could have a Material Adverse Effect, (D) do not conflict
with any provision of its corporate charter or bylaws of, or any agreement or
other instrument binding upon it, (E) do not require any consent, approval or
authorization of any Governmental Authority or any other Person not a party
hereto and (F) do not result in, or require the creation or imposition of, any
Lien on any of its properties other than as contemplated by the Operative
Documents.
(iii) Enforceability. The execution and delivery
of this Participation Agreement and the other Operative Documents to which it is
a party will result in valid and legally binding obligations of it enforceable
against it in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that availability
of the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought. The
Guarantor further specifically represents that the Guaranty shall be enforceable
against it in accordance with its terms, notwithstanding the occurrence of a
bankruptcy or insolvency proceeding with respect to the Lessee.
(iv) Subsidiaries. The Guarantor and each of its
Subsidiaries have only those Subsidiaries listed on Item 7.1(a) of Schedule II
hereto (as supplemented from time to time). The Lessee is a wholly-owned
Subsidiary of the Guarantor.
(v) Chief Executive Office. The chief executive
office and principal place of business of the Lessee is specified below its
name on Schedule I hereto.
(b) Litigation, etc. Except as disclosed on Item 7.1(b) of
Schedule II hereto, there is no litigation, at law or in equity, or any
proceeding before any federal, state or municipal board or other governmental or
administrative agency or any arbitration pending or to the knowledge of the
Guarantor or the Lessee threatened which is likely to involve any risk of any
judgment or liability not covered by insurance which may result in a Material
Adverse Effect or which may otherwise result in a Material Adverse Effect, or
which seeks to enjoin the consummation of, or which questions the validity of,
any of the transactions contemplated by this Participation Agreement or any of
the other Operative Documents, and no judgment, decree or order of any court,
board or other governmental or administrative agency or arbitrator has been
issued against or binds the Guarantor, the Lessee or any of their respective
Subsidiaries which has, or could have, a Material Adverse Effect.
(c) Burdensome Obligations; Compliance with Other Instruments,
Laws; No Defaults; Permits.
(i) Except as disclosed on Item 7.1(c) of
Schedule II hereto, neither the Guarantor nor any of its Subsidiaries, is
subject to any charter, corporate or other legal
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restriction, or any judgment, decree, order, rule or regulation that has or, to
the Guarantor's knowledge, is expected in the future to have a Material Adverse
Effect. Except as disclosed on Item 7.1(c) of Schedule II hereto, neither the
Guarantor nor any of its Subsidiaries, is a party to any contract or agreement
that has or, to the best of the Guarantor's knowledge, in the judgment of the
Guarantor's officers, could have, a Material Adverse Effect.
(ii) Neither the Guarantor nor the Lessee, is in
violation of any provision of its charter documents, bylaws, or any agreement or
instrument to which it is subject or by which it or any of its properties are
bound or any law, decree, order, judgment, statute, license, rule or regulation
(including, without limitation, all Environmental Laws) in a manner that is
reasonably likely to result in the imposition of substantial penalties that may
result in a Material Adverse Effect or that may otherwise have a Material
Adverse Effect.
(iii) No Lease Default or Lease Event of Default
has occurred and is continuing.
(iv) Except as set forth on Item 7.1(c) of
Schedule II hereto, the Guarantor and the Lessee have all necessary Permits from
or by, have made all necessary filings with, and have given all necessary
notices to, each Governmental Authority having jurisdiction over it, to the
extent required to own and operate its properties, to lease the properties it
operates under lease and to conduct its business as now conducted or presently
proposed to be conducted by it, except for (x) Permits which can be obtained by
the taking of ministerial action to secure the grant or transfer thereof and
where the failure to have such Permits would not have a Material Adverse Effect
and (y) where failure to have such Permits will not have a Material Adverse
Effect.
(v) No authorization or approval or other action
by, and no notice to of filing with, any Governmental Authority or regulatory
body or other Person (other than in connection with the repair, maintenance or
renovation of the Property in accordance with applicable local law) is required
for the due execution, delivery or performance by the Lessee or the Guarantor of
any Operative Document to which it is a party, except as contemplated by the
Operative Documents.
(vi) The delivery and performance by each Lessee
Party of its obligation under the Operative Documents to which such Lessee Party
is a party do not contravene or result in a breach of, or constitute a default
under any bond, indenture, deed of trust, mortgage, agreement or any other
instrument to which the deed of trust, mortgage, agreement or any other
instrument to which such Lessee Party is subject or by which the Lessee Party is
bound.
(d) Government Regulation. Neither the Guarantor nor the
Lessee is subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or the Investment Company Act of 1940, in each case
as amended and in effect from time to time, or is subject to any Requirement of
Law which regulates the incurring by the Guarantor or the Lessee of Indebtedness
for borrowed money, including, without limitation, any Requirement of Law
relating to common or contract carriers or to the sale of electricity, gas,
steam, water or other public utility services.
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(e) Margin Regulations. Neither the Guarantor nor any of its
respective Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying "margin stock" or "margin securities" within
the meaning of Regulation T, U or X issued by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") and does not own any margin
stock or margin securities. The proceeds of the funds advanced under the Notes
will not be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause the funds advanced under the
Notes to be considered an advance of "purpose credit" within the meaning of
Regulation U or X of the Federal Reserve Board. The Guarantor will not take nor
permit any of its Subsidiaries or any agent acting on its or their behalf to
take, any action which might cause this Participation Agreement or any other
Operative Document or any document or instrument delivered pursuant to this
Participation Agreement to violate any regulation of the Federal Reserve Board.
(f) Certain Tax Matters.
(i) The Guarantor and its Subsidiaries have (a)
made or filed all material federal, state, local and foreign income and all
other material Tax returns, reports and declarations required by any
jurisdiction to which any of them is subject or properly filed for and received
extensions with respect thereto which are still in full force and effect and
which have been fully complied with in all material respects, (b) paid all Taxes
and other governmental assessments and charges shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith by appropriate proceedings and for which adequate reserves, to the extent
required by GAAP, have been established and (c) to the extent required by GAAP,
set aside on their books provisions reasonably adequate for the payment of all
estimated taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid Taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Guarantor know of no basis for any such claim other than Taxes that the
Guarantor and its Subsidiaries are contesting in good faith through appropriate
proceedings and for which appropriate reserves, to the extent required by GAAP,
have been established.
(ii) Except as set forth in Schedule 7.1(f) of
Schedule II hereto, no material sales, use, excise, transfer or other Tax, fee
or imposition shall result from the sale, transfer or purchase of the Property,
except such material Taxes, fees or impositions that have been paid in full or
are insured as to payment in full by the Title Company.
(g) Liens. Except as set forth on Item 7.1(g) of Schedule II
hereto or as permitted by Section 8.2(b), there are no Liens on or rights of
third parties in, nor has there occurred any event which would give any third
party a claim to such a right in, any of the properties or assets of the
Guarantor or the Lessee. The Permitted Exceptions do not and will not materially
and adversely affect (1) the ability of the Lessee or the Guarantor to pay their
respective obligations under the Operative Documents in a timely manner or (2)
the use of the Property for the use currently being made thereof, the operation
of the Property as currently being operated or the value of the Property. Upon
execution by the Lessee and recording thereof of the Precautionary Deed of
Trust, and upon execution and filing of the Precautionary Financing Statements,
the
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Agent will have a valid first lien on the Lessee's interest in the Property and
a valid security interest in the personal property thereon subject to no Liens,
charges or encumbrances other than the Permitted Exceptions.
(h) Financial Matters.
(i) There has been delivered to each of the
Lessor Parties a complete and correct copy of the consolidated balance sheet of
the Guarantor as at the end of the Fiscal Year ended December 31, 1999 and the
related consolidated statements of income, common shareholders' equity and cash
flows of the Guarantor for such Fiscal Year, prepared in each case in accordance
with Section 8.1(d)(iii), together with the accountant's report with respect
thereto as required by such Section. Such financial statements have been
prepared in accordance with GAAP consistently applied and present fairly the
consolidated financial condition of the Guarantor as at December 31, 1999, and
the results of operations of the Guarantor for the Fiscal Year ended December
31, 1999.
(ii) There has been delivered to each of the
Lessor Parties a complete and correct copy of the consolidated balance sheet of
the Guarantor as at the end of the Fiscal Quarter ended September 30, 2000 and
the related consolidated statements of income and cash flows of the Guarantor
for such Fiscal Quarter, prepared in each case in accordance with Section
8.1(d)(ii). Such financial statements have been prepared in accordance with GAAP
consistently applied and present fairly the consolidated financial condition of
the Guarantor as at September 30, 2000, and the results of operations of the
Guarantor for the Fiscal Quarter ended September 30, 2000, subject only to
normal year-end audit adjustments.
(i) Changes, etc. Except as set forth on Item 7.1(i) of
Schedule II hereto, or as disclosed in or reflected on the consolidated balance
sheet of the Guarantor as at December 31, 1999 referred to in Section 7.1(h)(i)
no event has occurred and is continuing which has had or could have a Material
Adverse Effect.
(j) Employee Benefit Plans.
(i) In General. Each Employee Benefit Plan has
been maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Revenue Code, including
but not limited to the provisions thereunder respecting prohibited transactions.
The Guarantor has heretofore delivered to the Lessor Parties the most recently
completed annual report, Form 5500, with all required attachments, with respect
to each Guaranteed Pension Plan.
(ii) Terminability of Welfare Plans. Under each
Employee Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(l) or Section 3(2)(B) of ERISA, no benefits are due unless
the event giving rise to the benefit entitlement occurs prior to plan
termination (except as required by Title 1, Part 6 of ERISA). The Guarantor or
an ERISA Affiliate, as appropriate, may terminate each such plan at any time (or
at any time subsequent to the expiration of any applicable bargaining agreement)
in the discretion of the Guarantor or such ERISA Affiliate without liability to
any Person.
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(iii) Guaranteed Pension Plans. Each contribution
required to be made to a Guaranteed Pension Plan, without regard to any waiver
or extension, whether required to be made to avoid the incurrence of an
accumulated funding deficiency, the notice of lien provisions of Section 302(f)
of ERISA, or otherwise, has been timely made. No waiver of an accumulated
funding deficiency or extension of amortization periods has been received with
respect to any Guaranteed Pension Plan. No liability to the PBGC (other than
required insurance premiums, all of which have been paid) has been incurred by
the Guarantor or any ERISA Affiliate with respect to any Guaranteed Pension Plan
and there has not been any ERISA Reportable Event, or any other event or
condition which presents a material risk of termination of any Guaranteed
Pension Plan by the PBGC, other than those ERISA Reportable Events or other
events or conditions which have been disclosed in writing to the Lessor Parties
and which have not been deemed by any of the foregoing to pose a material risk
of termination of any Guaranteed Pension Plan by the PBGC. Based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred within
twelve months of the date of this representation), and on the actuarial methods
and assumptions employed for that valuation, the aggregate benefit liabilities
of all such Guaranteed Pension Plans within the meaning of Section 4001 of ERISA
did not exceed the aggregate value of the assets of all such Guaranteed Pension
Plans by more than $500,000, disregarding for this purpose the benefit
liabilities and assets of any Guaranteed Pension Plan with assets in excess of
benefit liabilities.
(iv) Multiemployer Plans. Neither the Guarantor
nor any ERISA Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as a
result of a sale of assets described in Section 4204 of ERISA. Neither the
Guarantor nor any ERISA Affiliate has been notified that any Multiemployer Plan
is in reorganization or insolvent under and within the meaning of Section 4241
or Section 4245 of ERISA or that any Multiemployer Plan intends to terminate or
has been terminated under Section 4041A of ERISA.
(v) No Prohibited Transactions. Compliance by
the parties with the terms of the Operative Documents will not involve any
non-exempt prohibited transactions under Section 406(a) of ERISA or Section 4975
of the Internal Revenue Code of 1986, as amended.
(k) Insurance. All policies of insurance of any kind or nature
owned by or issued to the Guarantor or any of its Subsidiaries, the lapse of
which, individually or collectively, would have a Material Adverse Effect, are
in full force and effect and are of a nature and provide such coverage as is
sufficient and as is customarily carried by companies of the size and character
of the Guarantor and the Subsidiaries. In addition, all insurance coverage
meeting the requirements of Article XIII of the Master Lease is in full force
and effect with respect to the Property.
(l) Labor Matters. Except as set forth on Item 7.1(l) of
Schedule II hereto, there are no strikes, grievances, unfair labor practices,
written complaints, or other labor disputes pending or threatened against the
Guarantor or its Subsidiaries except for those strikes, grievances, unfair labor
practices, written complaints or other labor disputes which could not have a
Material Adverse Effect. All payments due from any of the Guarantor or its
Subsidiaries pursuant to the provisions of any collective bargaining agreement
have been paid or accrued as a liability on the books of the Guarantor or such
Subsidiaries unless, in the case of any Subsidiary
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other than the Lessee, the failure to make such payment could not reasonably be
expected to have a Material Adverse Effect.
(m) Environmental Protection. Except as disclosed on Item
7.1(m) of Schedule II hereto (which items, individually or in the aggregate, do
not constitute a Material Adverse Environmental Condition): (i) the operations
of the Guarantor and each of its Material Subsidiaries comply in all material
respects with all Environmental Laws, (ii) the Guarantor and each of its
Material Subsidiaries have obtained all material environmental, health and
safety Permits necessary for its operation, and all such Permits are in good
standing, with all applicable applications or renewals being timely filed, and
the Guarantor and each of its Material Subsidiaries are in material compliance
with all terms and conditions of such Permits, (iii) none of the operations of
the Guarantor or any of its Material Subsidiaries is subject to any material
proceeding by or before any Governmental Authority alleging the violation of, or
any liability under any, Environmental Laws, (iv) neither the Guarantor nor any
of its Material Subsidiaries (including all of their present facilities and
operations, as well as its past facilities and operations), is subject to any
material outstanding written order or agreement with any Governmental Authority
or Person respecting (A) any Remedial Action, or (B) any Environmental Claims,
(v) to the best of the Guarantor's knowledge, none of the operations of the
Guarantor or any of its Material Subsidiaries is the subject of any material
federal or state investigation under Environmental Laws including any
investigation evaluating whether any Remedial Action is needed to respond to a
Release of any Hazardous Substance, (vi) none of the operations of the Guarantor
or any of its Material Subsidiaries is subject to any other Environmental Law,
which could result in a Material Adverse Environmental Condition upon such
operations, taken as a whole and (vii) neither the Guarantor nor any of its
Material Subsidiaries has received notice that any Hazardous Substance which any
one of them has Released, generated, transported or disposed of has been found
at any site at which any third party (including any Governmental Authority) has
conducted or is conducting or is required to conduct any Remedial Action.
(n) Copyrights, Patents and Trademarks. The Guarantor and its
Subsidiaries own or possess all patents, trademarks, service marks, copyrights
and licenses, and all rights with respect to the foregoing, necessary for the
conduct of its business as now conducted. To the best of the Guarantor's and the
Lessee's knowledge, such ownership or possession do not materially conflict with
the rights of others, except for conflicts, which if become the subject of any
action or proceedings brought by any third party, including any Governmental
Authority, would not have a Material Adverse Effect.
(o) Title. The Guarantor and the Lessee have title to its
assets reflected in the balance sheet for the Fiscal Year ended December 31,
1999 referred to in Section 7.1(h)(i) (except as set forth on Item 7.1(o) of
Schedule II hereto and except for assets disposed of since such date in the
ordinary course of business), and none of the properties and assets of the
Guarantor or the Lessee is subject to any Liens, except Liens permitted by this
Participation Agreement. The Guarantor and the Lessee enjoy peaceful and
undisturbed possession of the Property. Neither the Guarantor nor the Lessee
nor, to the Guarantor's and the Lessee's knowledge, any other party to any lease
of real property on which facilities operated by the Guarantor or the Lessor is
situated is in default of its obligations thereunder or has delivered or
received any notice of default under any such lease, nor has any event occurred
which, with the
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giving of notice, the passage of time or both, would constitute a default under
any such lease, except for any default which would not have a Material Adverse
Effect.
(p) Full Disclosure; Pro Forma Effect of Overall Transaction.
Neither this Participation Agreement (including the schedules and exhibits
hereto), nor any of the other Operative Documents, nor any written statement
prepared or furnished by or on behalf of the Guarantor or the Lessee to a Lessor
Party in connection with the negotiation, preparation, execution or performance
of this Participation Agreement and the other Operative Documents contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Guarantor or the Lessee which the Guarantor or the Lessee has not
disclosed to the Lessor Parties which had or would have a Material Adverse
Effect or which would, immediately after giving effect to the Overall
Transaction, cause any of the representations and warranties of the Guarantor
and the Lessee set forth in this Section 7.1 to be untrue in any material
respect or which would cause any of the statements made herein to be misleading
in any material respect.
(q) Seniority. Neither the Notes nor the Equity Investment is
subordinate or junior in right of payment, in any manner, to any other
Indebtedness of the Guarantor or any Indebtedness of the Lessee (except as
anticipated under Article XI of this Participation Agreement and other
provisions of the Operative Documents).
(r) Compliance of Property with Requirements of Law. The
contemplated use of the Property by the Lessee and its respective agents,
assignees, employees, lessees, licensees and tenants complies in all material
respects with all (i) Requirements of Law (including, all zoning and land use
laws and Environmental Laws) and (ii) Insurance Requirements.
(s) Plans and Specifications, Utilities, etc. All water,
sewer, electric, gas, telephone and drainage facilities for the Property, all
other utilities required to adequately service the Property for its intended use
and means of access between the Property and public highways for pedestrians and
motor vehicles are available pursuant to adequate permits (including any that
may be required under applicable Environmental Laws). All utilities serving the
Property are located in, and vehicular access to the Property is provided by,
either public rights-of-way abutting the Property or Appurtenant Rights. The
Property has adequate rights of access to public ways.
(t) No Adverse Proceedings. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent domain under any
Environmental Law or any proceeding proposing special or other assessments for
public improvements or affecting the Property) pending or, to the best knowledge
of the Lessee, threatened, with respect to the Lessee, its Affiliates or the
Property or any part thereof which adversely affects the title to the Property,
or adversely affects the use, operation or value of, the Property.
(u) Master Lease. Upon the execution and delivery of the
Master Lease, (i) the Lessee will have unconditionally accepted the Property
covered thereby and (ii) no right of offset will exist with respect to any Rent
or other sums payable under the Master Lease covering the Property.
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(v) Conveyance Instruments. The Conveyance Instruments, when
filed and recorded in the jurisdictions specified in the opinion delivered
pursuant to Sections 6.1(f), will create, inter alia, in favor of the Agent,
enforceable Liens of record and perfected first priority security interests in
the Property, subject to Permitted Exceptions.
(w) Private Offering. Neither the Lessee nor the Guarantor has
offered any interest in this Participation Agreement, the Notes, the Equity
Investment, the Master Lease, the Rent or any similar security for sale to, or
solicited offers to buy any thereof from, or otherwise directly or indirectly
approached or negotiated with respect thereto with, any prospective purchaser
other than the Note Purchaser, the Lessor and the Liquidity Banks, each of which
was offered such interest by the Lessee and the Guarantor in a manner that will
not require registration of such interests under the Securities Acts or the
qualification of any of the Operative Documents under the Trust Indenture Act of
1939, and each of which the Lessee had reasonable grounds to believe, and as to
the Note Purchaser, the Lessor and the Liquidity Banks, after reasonable inquiry
does believe, has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of such an
investment; and, assuming the truthfulness of the representations by the other
Lessor Parties herein, the issuance, sale and delivery of the Notes, the funding
of the advances thereunder and the funding of the Equity Investment and the
interests in this Participation Agreement represented thereby under the
circumstances contemplated by this Participation Agreement do not require the
registration of such Notes, Equity Investment or interests under the Securities
Act or the qualification of any of the Operative Documents (or of any indenture
in respect of any thereof) under the Trust Indenture Act of 1939, as amended.
Section 7.2 Representations and Warranties of the Guarantor and the
Lessee as of each Funding Date after the Initial Funding Date. Each of the
Guarantor and the Lessee represents and warrants to each of the Lessor Parties
as of each Funding Date after the Initial Funding Date as follows:
(a) Representations and Warranties. The representations and
warranties of the Guarantor and the Lessee set forth in the Operative Documents
(including the representations and warranties set forth in Section 7.1) are true
and correct in all material respects on and as of the 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.
(b) Liens. Neither the Guarantor nor the Lessee has permitted
any Liens to be placed against the Property other than Permitted Liens.
(c) Absence of Default, Etc. No Lease Default or Lease Event
of Default has occurred and is continuing. No Lease Default or Lease Event of
Default will occur as a result of, or after giving effect to, the funding of the
advances under the Notes requested by the Funding Notice on such date.
Section 7.3 Representations and Warranties of the Note Purchaser. The
Note Purchaser represents and warrants to each of the Transaction Parties as
follows:
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(a) ERISA. It is not and will not be purchasing the Notes or
funding the advances thereunder with the assets of an "employee benefit plan"
(as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA, or
"plan" (as defined in Section 4975(e)(1) of the Revenue Code), nor will any such
assets be used in connection with any other arrangement related to the
transactions contemplated hereby, including the Note Purchase Agreement, the
Liquidity Agreement or the sale of Commercial Paper.
(b) Corporate Existence. It is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation.
(c) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by it of this
Participation Agreement and each other Operative Document to which it is or will
be a party (i) are within its corporate powers, (ii) have been duly authorized
by all necessary corporate action, (iii) require no action by or in respect of,
or filing with, any governmental body, agency or official, and (iv) do not
contravene, or constitute a default under, its certificate of incorporation or
by-laws.
(d) No Lessor Liens. The Property is free and clear of all
Lessor Liens created by it.
(e) Validity. This Participation Agreement constitutes the
legal, valid and binding obligation of the Note Purchaser, enforceable against
it in accordance with its terms, and each Operative Document executed by it
pursuant hereto will, on the due execution and delivery thereof, be its legal,
valid and binding obligation, enforceable in accordance with its terms, subject,
in each case, as to enforceability, bankruptcy, insolvency, reorganization and
other similar laws affecting enforcement of creditor rights generally (insofar
as any such law relates to the bankruptcy, insolvency, reorganization or similar
event with respect to it) and, as to the availability of specific performance or
other injunctive relief, subject to the discretionary power of a court to deny
such relief and to general equitable principles.
(f) Private Offering. The Note Purchaser has not offered (or
solicited offers for), and will not offer (or solicit offers for), any interest
in this Participation Agreement, the Notes, the Equity Investment, the Master
Lease or the Rent in a manner which would require the registration of such
interest, Notes, Equity Investment under the Securities Act or the qualification
of any of the Operative Documents (or of any indenture in respect of any
thereof) under the Trust Indenture Act of 1939, as amended.
Section 7.4 Representations and Warranties of the Lessor. Effective as
of the date of execution hereof and as of the Initial Funding Date, the Lessor
represents and warrants to each of the other parties hereto as follows:
(a) ERISA. It is not and will not be funding the Equity
Investment with the assets of an "employee benefit plan" (as defined in Section
3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as defined in
Section 4975(e)(1) of the Revenue Code), nor will any such assets be used in
connection with any other arrangement related to the transactions contemplated
hereby.
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(b) Chief Executive Office. Its chief executive office and
principal place of business, and the place where the documents, accounts and
records relating to the Overall Transaction are kept, are located at the
location specified below its name on Schedule I hereto.
(c) Corporate Existence. It is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation.
(d) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by it of this
Participation Agreement and each other Operative Document to which it is or will
be a party (i) are within its corporate powers, (ii) have been duly authorized
by all necessary corporate action, (iii) require no action by or in respect of,
or filing with, any governmental body, agency or official, and (iv) do not
contravene, or constitute a default under, its certificate of incorporation or
by-laws.
(e) No Lessor Liens. The Property is free and clear of all
Lessor Liens created by it.
(f) Validity. This Participation Agreement constitutes the
legal, valid and binding obligation of the Lessor, enforceable against it in
accordance with its terms, and each Operative Document executed by it pursuant
hereto will, on the due execution and delivery thereof, be its legal, valid and
binding obligation, enforceable in accordance with its terms, subject, in each
case, as to enforceability, bankruptcy, insolvency, reorganization and other
similar laws affecting enforcement of creditor rights generally (insofar as any
such law relates to the bankruptcy, insolvency, reorganization or similar event
with respect to it) and, as to the availability of specific performance or other
injunctive relief, subject to the discretionary power of a court to deny such
relief and to general equitable principles.
(g) Litigation. There is no litigation, at law or in equity,
or any proceeding before any federal, state or municipal board or other
governmental or administrative agency or any arbitration pending or, to the
knowledge of the Lessor, threatened which is likely to involve any risk of any
material judgment or liability not covered by insurance or which may otherwise
result in a material adverse effect on the Lessor's ability to perform its
obligations under the Operative Documents, or which seeks to enjoin the
consummation of, or which questions the validity of, any of the transactions
contemplated by this Participation Agreement or any of the other Operative
Documents, and no judgment, decree or order of any court, board or other
governmental or administrative agency or arbitrator has been issued against or
binds the Lessor which has, or could have, a material adverse effect of the
Lessor's ability to perform its obligations under the Operative Documents.
(h) Private Offering. The Lessor has not offered (or solicited
offers for), and will not offer (or solicit offers for), any interest in this
Participation Agreement, the Notes, the Equity Investment, the Master Lease or
the Rent in a manner which would require the registration of such interest,
Notes, Equity Investment under the Securities Act or the qualification of any of
the Operative Documents (or of any indenture in respect of any thereof) under
the Trust Indenture Act of 1939, as amended.
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(i) Certain Tax Matters. [Each of the Lessor and its
Affiliates has (a) made or filed all material federal, state, local and foreign
income and all other material Tax returns, reports and declarations required by
any jurisdiction to which it is subject or properly filed for and received
extensions with respect thereto which are still in full force and effect and
which have been fully complied with in all material respects, (b) paid all Taxes
and other governmental assessments and charges shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith by appropriate proceedings and for which adequate reserves, to the extent
required by GAAP, have been established and (c) to the extent required by GAAP,
set aside on their books provisions reasonably adequate for the payment of all
estimated taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid Taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Lessor know of no basis for any such claim other than Taxes that the
Lessor and/or its Affiliates are contesting in good faith through appropriate
proceedings and for which appropriate reserves, to the extent required by GAAP,
have been established. Notwithstanding the foregoing, the Lessor shall not be
deemed to have breached any of the representations contained herein made as to
its Affiliates unless such breach would have a material adverse effect on the
Property or the Lessor Parties' security interest, Liens or other rights in the
Property and the Collateral.
Section 7.5 Representations and Warranties of each Liquidity Bank and
the Letter of Credit Issuer. Effective as of the date of execution hereof and as
of the Initial Funding Date, each of Liquidity Bank and the Letter of Credit
Issuer represents and warrants to each of the other parties hereto as follows:
(a) Existence. It is validly existing and is duly licensed and
qualified to operate as a banking corporation (or as an agency or branch, if it
is an agency or a branch of a foreign bank) and is in good standing under the
laws of the United States or the State of New York or such other State where it
is qualified to operate in the United States.
(b) Authorization; Validity. The execution, delivery and
performance by it of this Participation Agreement and each other Operative
Document to which it is or will be a party have been duly authorized. This
Participation Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, and each Operative Document
executed by it pursuant hereto will, on the due execution and delivery thereof,
be its legal, valid and binding obligation, enforceable in accordance with its
terms, subject, in each case, as to enforceability, bankruptcy, insolvency,
reorganization and other similar laws affecting enforcement of creditor rights
generally (insofar as any such law relates to the bankruptcy, insolvency,
reorganization or similar event with respect to it) and, as to the availability
of specific performance or other injunctive relief, subject to the discretionary
power of a court to deny such relief and to general equitable principles.
(c) Private Offering. It has not offered (or solicited offers
for), and will not offer (or solicit offers for), any interest in this
Participation Agreement, the Notes, the Equity Investment, the Master Lease or
the Rent in a manner which would require the registration of such interest,
Notes, Equity Investment under the Securities Act or the qualification of any of
the Operative Documents (or of any indenture in respect of any thereof) under
the Trust Indenture Act of 1939, as amended.
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ARTICLE VIII
COVENANTS
Section 8.1 Affirmative Covenants of Guarantor and Lessee. Each of the
Guarantor and the Lessee hereby agrees for the benefit of the Lessor Parties
that, until all Commitments have terminated and all Obligations have been paid
and performed in full, it will, and, to the extent required, will cause each of
its Subsidiaries to, perform the obligations set forth in this Section 8.1.
(a) Conduct of Business.
(i) Corporate Existence; Maintenance of
Properties. The Guarantor will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, material
rights, and those of its Subsidiaries except to the extent that the Guarantor's
failure to do so will not have a Material Adverse Effect; provided, however,
that the corporate existence and material rights of the Lessee shall always be
preserved and kept in full force and effect. The Guarantor (a) will cause all of
its material properties and those of its Subsidiaries used or useful in the
conduct of its business or the business of its Subsidiaries to be maintained and
kept in good condition, repair and working order and supplied with all
reasonably necessary equipment, and (b) will cause to be made all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Guarantor may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section 8.1(a) shall
prevent the Guarantor from discontinuing the operation and maintenance of any of
its properties or those of its Subsidiaries if such discontinuance is, in the
reasonable discretion of the Guarantor, desirable in the conduct of its or their
business and would not have a Material Adverse Effect; provided, further, that
the Property shall always be maintained and operated in accordance with the
Master Lease.
(ii) Compliance with Laws, Contracts, Licenses,
and Permits. The Guarantor will, and will cause each of its Subsidiaries to,
comply with (A) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws which may be in effect from time to
time, (B) the provisions of its charter documents and by-laws, (C) all
agreements and instruments by which it or any of its properties or business may
be bound and (D) all applicable decrees, orders, and judgments; if in each such
case failure to comply would have a Material Adverse Effect. If at any time any
authorization, consent, approval, permit or license from any office, agency or
instrumentality of any government shall become necessary or required in order
that the Guarantor may fulfill any of the Obligations, the Guarantor will
promptly take or cause to be taken all reasonable steps within the power of the
Guarantor to obtain such authorization, consent, approval, permit or license and
furnish the Lessor Parties with evidence thereof.
(b) Insurance. The Guarantor and the Lessee shall keep their
respective assets which are of an insurable character insured by financially
sound and reputable insurers (or make adequate and prudent provisions for self
insurance) against loss or damage (i) to the extent and in the manner customary
for companies in similar businesses similarly situated and (ii) to the extent
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such coverage is available on commercially reasonable terms. Without limiting
the generality of the foregoing, the Lessee shall maintain insurance on and with
respect to the Property in accordance with the relevant provisions of the
Construction Agency Agreement and the Master Lease.
(c) Records and Accounts. The Guarantor and the Lessee will
each (i) keep true and accurate records and books of account in which full, true
and correct entries will be made in accordance with GAAP, and (ii) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves.
(d) Reports. The Guarantor shall deliver to the Lessor
Parties:
(i) Promptly (but in no event later than five
(5) Business Days after obtaining knowledge thereof) upon any principal officer
of the Guarantor or the Lessee obtaining knowledge of any Lease Default or Lease
Event of Default, a certificate of a Responsible Officer of the Guarantor
specifying the nature and period of existence thereof and what action has been
taken, is being taken or is proposed to be taken with respect thereto.
(ii) As soon as available, and in any event
within sixty (60) days after the last day of each of the first three Fiscal
Quarters of each Fiscal Year, commencing with the Fiscal Quarter ending
immediately after the Initial Funding Date the consolidated and consolidating
balance sheets of the Guarantor as at the end of such quarter and the
consolidated and consolidating statements of income, retained earnings and cash
flows of the Guarantor for such quarter and for the portion of the current
Fiscal Year then ended, all in reasonable detail and accompanied by a
certificate from the Chief Financial Officer of the Guarantor stating that such
statements have been properly prepared in accordance with the books and records
of the Guarantor and fairly present the financial condition and operations of
the Guarantor subject only to normal year-end audit adjustments.
(iii) As soon as available, and in any event
within one hundred and five (105) days after the end of each Fiscal Year, the
consolidated and consolidating balance sheets of the Guarantor as at the end of
such year and the consolidated and consolidating statements of income, retained
earnings and cash flows of the Guarantor for such Fiscal Year, setting forth in
each case in comparative form the consolidated figures for the Guarantor for the
previous Fiscal Year (all in reasonable detail), which consolidated statements
of the Guarantor shall be audited by KPMG, or other independent public
accountants of recognized national standing selected by the Guarantor, and
accompanied by a letter of such accountants that such financial statements have
been prepared in accordance with GAAP.
(iv) Together with the financial statements
delivered pursuant to clause (ii) and clause (iii), a certificate of the Chief
Financial Officer of the Guarantor setting forth a computation showing
compliance by the Guarantor with the financial tests set forth in Section 8.3
hereof, certifying as to the Lessee's compliance with the maintenance
requirements for the Property set forth in the Master Lease, and stating that
such officer has caused the provisions of this Participation Agreement to be
reviewed and has no knowledge of any Lease Default or Lease Event of Default,
or, if such signing officer has such knowledge, specifying
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such Lease Default or Lease Event of Default and the nature thereof, and what
action the Guarantor has taken, is taking, or proposes to take with respect
thereto (the "Compliance Certificate").
(v) Promptly upon its receipt thereof, copies of
all audit reports (including so-called "management letters") submitted by
independent public accountants in connection with each annual, interim or
special audit of the financial statements of the Guarantor or any of its
Subsidiaries made by such accountants.
(vi) Promptly and in any event within thirty (30)
days after the Guarantor, any of its Subsidiaries or any ERISA Affiliate knows
or has reason to know that any ERISA Reportable Event has occurred.
(vii) Upon request of any Lessor Party, a copy of
the most recent actuarial statement required to be submitted under Section
103(d) of ERISA and Annual Report, Form 5500, with all required attachments, in
respect of each Guaranteed Pension Plan and promptly upon receipt or dispatch,
any notice, report, demand or letter sent or received in respect of a Guaranteed
Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of
ERISA, or in respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219,
4242, or 4245 of ERISA.
(viii) Promptly and in any event within thirty (30)
days after notice or knowledge thereof, notice that the Guarantor or any of its
Subsidiaries has become subject to the tax on prohibited transactions imposed by
Section 4975 of the Revenue Code in an amount which has, individually or in the
aggregate, a reasonable likelihood of resulting in a Material Adverse Effect,
together with a copy of Form 530.
(ix) As soon as available, copies of all notices,
proxy statements, reports and financial statements which the Guarantor or any of
its Subsidiaries shall send or make available to its shareholders and all
registration statements and reports which the Guarantor or any of its
Subsidiaries shall file with the Securities and Exchange Commission.
(x) With reasonable promptness, such other
information respecting the business, properties, assets, operations or
condition, financial or otherwise, of the Guarantor or any of its Subsidiaries
as from time to time any of the Lessor Parties may reasonably request.
(e) Right to Inspect Premises and Records. Without limiting
the Lessor Parties' inspection rights set forth in Section 4.2 of the Master
Lease, the Guarantor and the Lessee will agree to all reasonable requests by the
Lessor Parties (i) to make extracts from the books of account and financial
records of the Guarantor or the Lessee solely for its own use in connection with
the Obligations of the Lessee and the Guarantor under the Operative Documents,
(ii) to provide the Lessor Parties or its authorized representatives, during
normal business hours or such other time as agreed upon by the parties, at the
offices of the Guarantor, all books and records for inspections or consultation
in connection with the Guarantor's and Lessee's compliance and performance of
the obligations under the Operative Documents, and (iii) to authorize the Lessor
Parties or its authorized representatives right of access and entry on the
Property for inspection of any or all components of the Property; provided,
however, at any time no Lease Default or Lease Event of Default shall have
occurred and be continuing, a Lessor Party shall give the
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Guarantor and the Lessee written notice no later than five (5) Business Days
prior to the day of inspection. Upon the occurrence and during the continuance
of a Lease Default or a Lease Event of Default, the Guarantor shall reimburse
the Lessor Parties for the costs incurred by such parties in connection with the
exercise of their respective rights under this subsection.
(f) Payment of Liabilities. The Guarantor shall pay and
discharge, and shall cause each of its Subsidiaries to pay and discharge, at or
before their maturity or in accordance with customary trade terms, all of their
respective Indebtedness due and payable, except where such Indebtedness is
contested in good faith and by appropriate proceedings diligently conducted and
reserves or other appropriate provisions, if any, as shall be required by GAAP,
shall have been made therefor, and except to the extent otherwise provided by
any subordination provisions applicable to such Indebtedness, unless, in the
case of the Guarantor or any such Subsidiary other than the Lessee, failure to
pay or discharge such Indebtedness could not reasonably be expected to have a
Material Adverse Effect.
(g) Payment of Charges and Indebtedness. The Guarantor shall,
and shall cause each of its Subsidiaries to, timely file or cause to be filed
all tax returns, and shall timely pay and discharge all taxes and other
governmental charges and assessments, due and payable, and shall pay all claims
for labor, materials or supplies which if unpaid might by law become a Lien or
charge upon any property of the Guarantor or any of its Subsidiaries; provided,
however, that any such taxes and other governmental charges and assessments or
claims, the nonpayment of which would not be reasonably likely to have a
Material Adverse Effect, need not be paid if the validity or amount thereof
shall currently be contested in good faith by appropriate proceedings and if the
Guarantor or such Subsidiary shall, in accordance with GAAP, have set aside on
its books adequate reserves with respect thereto; and provided further, however,
that the Guarantor shall, and shall cause each Subsidiary to, pay all such
taxes, governmental charges, assessments or claims forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor. The obligations of the Guarantor under this Section 8.1(g)
with respect to the filing of tax returns and the payment of taxes, governmental
charges, assessments and claims shall survive the payment, prepayment or
redemption of the Notes and the Equity Investment and the termination of this
Participation Agreement and the other Operative Documents.
(h) Material Change in Business. The primary business of the
Guarantor, the Lessee and the Guarantor's Subsidiaries shall continue to be
developing and publishing products for interactive electronic media.
(i) Compliance with Securities Laws. Except for non-compliance
which, individually or collectively, does not have a Material Adverse Effect,
(i) any and all purchases or redemptions by the Guarantor and/or any of its
Subsidiaries of any securities issued by the Guarantor or any of its
Subsidiaries or any other Person shall be effected in compliance with all
applicable Requirements of Law, including, but not limited to, the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
and (ii) any and all offers to sell and sales of securities or of obligations of
the Guarantor or any of its Subsidiaries evidenced by notes, bonds, debentures
or similar instruments, shall be effected in compliance with all applicable
Requirements of Law, including, but not limited to, the Trust Indenture Act of
1939, as amended.
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(j) Application of Proceeds. The Lessee shall cause proceeds
of the Notes and funding of the Equity Investment to be used as contemplated by
the Operative Documents.
(k) Environmental Protection.
(i) The Guarantor shall, and shall cause each of
its Material Subsidiaries to, (i) comply in all material respects with the
requirements of all Environmental Laws applicable to it, except where such
non-compliance could not reasonably be expected to result in a material
impairment in the value of, or a material liability with respect to the affected
premises, (ii) notify the Lessor Parties promptly in the event of any Release,
Environmental Claim or other Adverse Environmental Condition from, upon or
affecting any premises owned or occupied by the Guarantor or any Material
Subsidiary which Release, Environmental Claim or Adverse Environmental Condition
could result in a Material Adverse Effect or a material impairment of the value
of, or a material liability with respect to, such premises and (iii) promptly
forward to the Lessor Parties copies of all orders, notices, permits,
applications or other communications and reports in connection with any such
Release, Environmental Claim or other Adverse Environmental Condition or any
other matter relating to the Environmental Laws as they may affect such premises
which could result in a Material Adverse Effect or result in a material
impairment of the value of, or material liability with respect to, such
premises. The covenants provided for herein shall survive the payment or
redemption of the Notes and the Equity Investment and the termination of this
Participation Agreement and the other Operative Documents.
(ii) The Guarantor shall fully and promptly pay,
perform, discharge, defend, indemnify and hold harmless the Lessor Parties,
their respective Subsidiaries and Affiliates, and the respective managers,
members, directors, officers, employees and agents of any of the foregoing as to
any environmental matter as provided in Article XIII hereof.
(iii) Without limiting the foregoing, the
Guarantor and the Lessee will comply at all times with the environmental
provisions of the Participation Agreement, the Construction Agency Agreement and
the Environmental Indemnity Agreement and shall take all actions necessary or
required to preserve all indemnities and other remedies available under the
Participation Agreement, the Construction Agency Agreement and the Environmental
Indemnity Agreement.
(l) Ownership of the Lessee. The Guarantor shall at all times
maintain direct or indirect ownership of 100% of the issued and outstanding
Stock of the Lessee (including all rights to subscribe for, purchase (including
by conversion of any other security) or otherwise acquire any such Stock), free
and clear of all Liens.
(m) Notice of Change in Name, Identity or Address. Each of the
Guarantor and the Lessee shall provide the Lessor Parties thirty (30) days prior
written notice of any change in its name or the address of its chief executive
office and principal place of business or the office where it keeps its records
concerning its accounts and the Property leased by the Lessee under the Master
Lease.
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(n) Further Assurances. The Guarantor and the Lessee shall
take or cause to be taken from time to time all action reasonably necessary to
assure that the intent of the parties pursuant to the Operative Documents is
given effect as contemplated by Section 23.1 of the Master Lease, and that the
Lessor and the Agent, for the benefit of the other Lessor Parties, as each such
Lessor Party's respective interests may appear, holds a first priority perfected
Lien on the Property and the Master Lease, securing the amounts due thereon or
under the Operative Documents. The Guarantor and the Lessee shall execute and
deliver, or cause to be executed and delivered, to the Lessor Parties from time
to time, promptly upon request therefor, any and all other and further
instruments (including correction instruments and supplemental mortgages and
security agreements, as appropriate) that may be reasonably requested by the
Lessor Parties to cure any deficiency in the execution and delivery of this
Participation Agreement or any other Operative Document to which it is a party.
(o) No Disposition of the Property. The Lessee shall not sell,
contract to sell, assign, lease, transfer, convey or otherwise dispose of, or
permit to be sold, assigned, leased, transferred, conveyed or otherwise disposed
of, the Property or any part thereof except as expressly permitted by the
Operative Documents.
(p) Defense of Title. The Lessee will, at all times, at its
own cost and expense, warrant and defend the title of the Lessor to the Property
except with respect to Lessor Liens.
Section 8.2 Negative Covenants. The Guarantor hereby covenants and
agrees, subject to Section 15.5 hereof, for the benefit of the Lessor Parties
from and after the Documentation Date and until all Commitments have terminated
and all Obligations have been paid and performed in full:
(a) Limitations on Indebtedness. Neither the Guarantor nor any
of its Subsidiaries, including the Lessee, shall create, incur, assume or permit
to exist any Indebtedness except for Indebtedness which, in aggregate, on a pro
forma basis, would not result in a violation by the Guarantor of the financial
covenants set forth in Section 8.3 ("Permitted Indebtedness").
(b) Limitation on Liens, Etc. Neither Guarantor nor any of its
Subsidiaries shall create, incur, assume or permit to exist any Lien on or with
respect to any of its assets or property of any character, whether now owned or
hereafter acquired, except for Permitted Liens.
(c) Asset Dispositions. Neither the Guarantor nor any of its
Subsidiaries shall sell, lease, transfer or otherwise dispose of any of its
assets or property, whether now owned or hereafter acquired, except for the
following:
(i) Sales of inventory and products by the
Guarantor and its Subsidiaries in the ordinary course of their businesses;
(ii) Sales of surplus, damaged, worn or obsolete
equipment or inventory for not less than fair market value;
(iii) Sales or other dispositions of Investments
permitted by clauses (i) and (iii) of Section 8.2(e) below for not less than
fair market value;
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(iv) Sales or assignments of defaulted
receivables to a collection agency in the ordinary course of business;
(v) Licenses by the Guarantor or its
Subsidiaries of its patents, copyrights, trademarks, trade names and service
marks in the ordinary course of its business provided that, in each case, the
terms of the transaction are terms which then would prevail in the market for
similar transactions between unaffiliated parties dealing at arm's length;
(vi) Sales or other dispositions of assets and
property by the Guarantor to any of the Guarantor's Subsidiaries or by any of
the Guarantor's Subsidiaries to the Guarantor or any of its other Subsidiaries,
provided that, on the date of any such sale or disposition, the Guarantor and
such Subsidiary each reasonably believes that such sale or disposition is made
on terms which are no less favorable to the Guarantor then would prevail in the
market for similar transactions between unaffiliated parties dealing at arm's
length; and
(vii) Other sales, leases, transfers and disposals
of assets and property for not less than fair market value, provided that the
net proceeds from any such sale, lease, transfer or disposal shall not exceed
ten percent (10%) of the consolidated total assets of the Guarantor and its
Subsidiaries immediately prior to such sale, lease, transfer or disposal.
provided, however, that the foregoing exceptions shall not be construed to
permit any sales, leases, transfers or disposals of any of the Property, except
as expressly permitted by the Master Lease or any of the other Operative
Documents.
(d) Mergers, Acquisitions, Etc. Neither the Guarantor nor any
of its Subsidiaries shall consolidate with or merge into any other Person or
permit any other Person to merge into it, establish any new Subsidiary, acquire
any Person as a new Subsidiary or acquire all or substantially all of the assets
of any other Person, except for the following:
(i) Any Subsidiary of the Guarantor (other than
the Lessee) may merge or consolidate with any other Subsidiary of Guarantor;
(ii) Any Subsidiary of the Guarantor (other than
the Lessee) may merge or consolidate with the Guarantor, provided that the
Guarantor is the surviving corporation; and
(iii) The Guarantor may merge or consolidate with
any other corporation, establish a new Subsidiary, acquire any Person as a new
Subsidiary or acquire all or substantially all of the assets of any other
Person, provided that (A) in the case of any merger or consolidation, either (1)
the Guarantor is the surviving corporation or (2) the surviving corporation (y)
is a Solvent United States corporation with a financial condition equal to or
better than the financial condition of the Guarantor immediately prior to such
merger or consolidation and (z) assumes all of the obligations of the Guarantor
in a manner reasonably acceptable to the Consenting Parties; (B) no Lease
Default has occurred and is continuing at the time of such merger,
consolidation, establishment or acquisition or will occur after giving effect to
such merger, consolidation or acquisition; and (C) based upon a pro forma
Compliance Certificate provided to the Agent on behalf of the Lessor Parties
immediately prior to the consummation of any such merger, consolidation or
acquisition, the Guarantor shall continue to be in compliance
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with each of the financial covenants set forth in Section 8.3 hereof immediately
after giving effect to such merger, consolidation or acquisition.
(e) Investments. Neither the Guarantor nor any of its
Subsidiaries shall make any Investment except for the following:
(i) Investments by the Guarantor and its
Subsidiaries in Cash Equivalents;
(ii) Any transaction permitted by Section 8.2(a);
(iii) Money market mutual funds registered with
the Securities and Exchange Commission, meeting the requirements of Rule 2a-7
promulgated under the Investment Company Act of 1940;
(iv) Investments listed in Item 8.2(e) of
Schedule II hereto existing on the date of this Participation Agreement;
(v) Investments in Guarantor's Affiliates and
Subsidiaries; and
(vi) Other Investments, provided that the
Guarantor shall continue to be in compliance with each of the financial
covenants set forth in Section 8.3 hereof immediately after giving effect to
each such Investment, and provided further that before making any such
Investment in an amount greater than $25,000,000, the Guarantor shall provide
the Agent on behalf of the Lessor Parties a pro forma Compliance Certificate to
the effect that such Investment will not otherwise violate this clause (v).
(f) Dividends, Redemptions, Etc. Neither the Guarantor nor any
of its Subsidiaries shall (i) pay any dividends or make any distributions on its
Stock; (ii) purchase, redeem, retire, defease or otherwise acquire for value any
of its Stock; (iii) return any capital to any holder of its Stock as such; (iv)
make any distribution of assets, Stock, obligations or securities to any holder
of its Stock as such; or (v) set apart any sum for any such purpose (each act
described in clauses (i), (ii), (iii), (iv) and (v) being a "Distribution");
except under the following conditions:
(A) No Lease Event of Default shall have
occurred and be continuing;
(B) The Guarantor shall continue to be in
compliance with each of the financial covenants set forth in Section 8.3 hereof
immediately after giving effect to each such Distribution; and
(C) If the Distribution (in cash or value) is in
an amount greater than $25,000,000, the Guarantor shall have provided to the
Agent on behalf of the Lessor Parties a pro forma Compliance Certificate to the
effect that the Guarantor shall continue to be in violation of each of its
financial covenants set forth in Section 8.3 hereof immediately after giving
effect to such Distribution.
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Notwithstanding the foregoing, a conversion of the Guarantor's Class B Common
Stock into the Guarantor's Class A Common Stock shall not be deemed a
Distribution for the purpose of this Section 8.2(f).
(g) Employee Benefit Plans. Neither the Guarantor nor any
ERISA Affiliate will:
(i) engage in any "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of the Revenue Code
which could result in a material liability for the Guarantor or any of its
Subsidiaries; or
(ii) permit any Guaranteed Pension Plan to incur
an "accumulated funding deficiency", as such term is defined in Section 302 of
ERISA, in excess of $1,000,000, whether or not such deficiency is or may be
waived; or
(iii) fail to contribute to any Guaranteed Pension
Plan to an extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the assets of
the Guarantor or any of its Subsidiaries pursuant to Section 302(f) or Section
4068 of ERISA; or
(iv) permit or take any action which would result
in the aggregate benefit liabilities (with the meaning of Section 4001 of ERISA)
of all Guaranteed Pension Plans exceeding the value of the aggregate assets of
such plans by more than $1,000,000, disregarding for this purpose the benefit
liabilities and assets of any such plan with assets in excess of benefit
liabilities.
(h) Prohibited Uses of Proceeds. The Guarantor and the Lessee
shall not directly or indirectly, use the proceeds of any financial
accommodations provided hereunder in any manner which would result in a
violation of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.
(i) Transactions with Affiliates. The Guarantor shall not and
shall not permit any of its Subsidiaries to, enter into any transaction with any
Affiliate on terms that are less favorable to the Guarantor or such Subsidiary,
as the case may be, than terms which might be obtained at the time from Persons
that are not Affiliates if a Lease Default or Lease Event of Default shall be
continuing hereunder immediately prior to such transaction or would occur under
Article XVII of the Master Lease on a pro forma basis after giving effect to
such transaction.
Section 8.3 Financial Covenants. The Guarantor hereby covenants and
agrees, subject to Section 15.5 hereof, for the benefit of the Lessor Parties
from and after the Documentation Date and until all Commitments have terminated
and all Obligations have been paid and performed in full:
(a) Consolidated Net Worth The Guarantor shall not permit the
Consolidated Net Worth of the Guarantor at any time (such day on which the
Consolidated Net Worth of the Guarantor is measured shall be referred to herein
as a "determination date") which commences after the Documentation Date to be
less than the sum on such determination date of the following:
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(i) Ninety percent (90%) of the Consolidated Net
Worth of the Guarantor as of September 30, 2000;
plus
(ii) Seventy-five percent (75%) of the sum of the
positive net income of the Guarantor for each quarter after September 30, 2000;
plus
(iii) Seventy-five percent (75%) of net equity
proceeds (excluding equity issued through the ESOP or employee stock purchase
plans) and equity issued pursuant to the conversion of debt for each quarter
after September 30, 2000.
(b) Fixed Charge Coverage Ratio. The Guarantor shall not
permit the ratio of its Consolidated EBITDAR to Consolidated Fixed Charges as of
the end any measurement period to be less than 3.00:1.00. For purpose of this
paragraph, "measurement period" shall mean, with respect to any four fiscal
quarter period, the period of four fiscal quarters ending on the last day of
such fiscal quarter.
(c) Total Consolidated Debt to Total Consolidated Capital. The
Guarantor shall not, at any time, permit its Total Consolidated Debt to exceed
sixty percent (60%) of its Total Consolidated Capital.
(d) Quick Ratio. The Guarantor shall not, at any time, permit
the ratio of the sum its cash and Cash Equivalents and accounts receivables (net
reserves) to Total Consolidated Debt to be less than 1.00:1.00 for those fiscal
quarters ending on June 30 and September 30 and 1.75:1.00 for those fiscal
quarters ending on December 31 and March 31.
ARTICLE IX
COVENANTS OF THE LESSOR,
THE NOTE PURCHASER AND THE LIQUIDITY BANKS
Section 9.1 General Covenants of the Lessor and the Note Purchaser.
Each of the Lessor and the Note Purchaser hereby covenants and agrees,
individually and not jointly, that so long as this Participation Agreement and
the other Operative Documents are in effect:
(a) it will not create, incur, assume or suffer to exist any
Lessor Lien attributable to such Person upon the Master Lease or the Property
(other than as contemplated by any of the Operative Documents); and
(b) it will remove, at its sole expense, any Lessor Lien
created or incurred by it and attributable to it upon the Master Lease or the
Property (other than such Liens as are contemplated by any of the Operative
Documents).
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Section 9.2 Specific Covenants of the Lessor. The Lessor hereby
covenants and agrees, for the benefit of the Lessee, that so long as this
Participation Agreement and the other Operative Documents are in effect:
(a) the representations and warranties of the Lessor contained
in the Note Purchase Agreement shall be true and correct in all material
respects on and as of the date of each Note Purchase, as though made on and as
of such date, except to the extent such representations or warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct on and as of such earlier date;
(b) it will comply with each of its covenants set forth in the
Note Purchase Agreement (including, without limitation, (i) to timely present
all requests and information necessary to cause the Note Purchaser to purchase
the Notes and fund the advances to be made thereunder as and when required under
the Note Purchase Agreement and (ii) to not cause an Acceleration Event or an
Unmatured Acceleration Event to occur and be continuing) except to the extent
such failure to comply is a result of a breach by the Guarantor or the Lessee of
its obligations under this Participation Agreement or any of the other Operative
Documents;
(c) when it receives funds from the Note Purchaser, it will
transmit such funds to the Lessee without deduction or offset as and when
required under this Participation Agreement and the other Operative Documents;
(d) when it receives funds from the Lessee, it will transmit
such finds to the Note Purchaser without deduction or offset as and when
required under the Note Purchase Agreement and the other Operative Documents;
(e) it will keep complete and accurate books and records of
the transactions involving the Lessor arising under the Note Purchase Agreement
and the other Operative Documents; and
(f) so long as no Lease Default or Lease Event of Default
shall have occurred and be continuing, it will (i) not assign its Equity
Investment or its interest in the Operative Documents without the prior written
consent of the Lessee (which consent shall not be unreasonably withheld) and
(ii) not become a special purpose, bankruptcy-remote entity.
Section 9.3 Specific Covenant of the Note Purchaser. The Note Purchaser
hereby covenants and agrees, for the benefit of the Lessee, that so long as this
Participation Agreement and the other Operative Documents are in effect and no
Lease Event of Default or Lease Default shall have occurred and be continuing,
it shall purchases the Notes and make advances under the Notes in accordance
with the terms of this Participation Agreement and the Note Purchase Agreement.
Section 9.4 Covenants of the Other Lessor Parties. To the extent not
otherwise provided above, each of the Lessor Parties hereby covenants and
agrees, for the benefit of the Lessee, that so long as this Participation
Agreement and the other Operative Documents are in effect and no Lease Event of
Default or Lease Default shall have occurred and be continuing, it will comply
with each of its covenants set forth in the Operative Documents to which such
Person is a party, except to the extent such failure to comply directly or
indirectly arises out of, or relates to (or is
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alleged to have arisen out of or be related to) a breach by the Guarantor or the
Lessee of its obligations under this Participation Agreement or any of the other
Operative Documents.
Section 9.5 Notices Under the Note Purchase Agreement and the Liquidity
Documentation. Each of the Lessor and the Note Purchaser hereby agrees that it
shall promptly (but in any event no later than ten (10) Business Days after
delivery thereof), deliver to the Guarantor a copy of each notice sent by it
under the Note Purchase Agreement and the Liquidity Documentation to any other
party thereto.
ARTICLE X
PAYMENT OF CERTAIN EXPENSES; OPTIONAL APPRAISALS
The Lessee agrees, for the benefit of the Lessor, that:
Section 10.1 Transaction Expenses. The Lessee shall pay, or cause to be
paid, from time to time all Transaction Expenses. Transaction Expenses may,
subject to the conditions hereof, be paid with the proceeds of the Notes and/or
the funding of any portion of the Equity Investment.
Section 10.2 Stamp Taxes. The Lessee shall pay or cause to be paid 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 Note Purchase Agreement and Related Obligations. The
Lessee shall pay, before the delinquency date thereof, all costs, expenses and
other amounts (other than amounts that, pursuant to the Operative Documents, are
specifically required to be paid by any Lessor Party or that arise out of or in
connection with a default by the Lessor under the Operative Documents that does
not directly or indirectly arise out of or relate to a breach by the Guarantor
or the Lessee of its obligations under any of the Operative Documents) required
to be paid by the Lessor under the Note Purchase Agreement, any Note, the Asset
Purchase Agreement or the Liquidity Agreement.
Section 10.4 Optional Appraisals. If the Lessee elects the Remarketing
Option pursuant to Section 18.3 of the Master Lease, then any Lessor Party may,
at the sole option of each party, respectively, but at the expense and cost of
the Lessee, require reports of one or more independent appraisers selected by
the requesting parties, which reports shall state, in a manner reasonably
satisfactory to the requesting parties, the following:
(a) the appraiser's determination of the Fair Market Value of
the Property as of (i) the day on which the Remarketing Option was elected and
(ii) the Lease Termination Date; and
(b) such other matters as the Lessor Parties may reasonably
request.
Upon any party's delivery of written notice to the Guarantor that any of the
referenced parties is requiring delivery of appraisals pursuant to this Section
10.4, the Guarantor shall cause such reports to be delivered to the requesting
party no later than thirty (30) days after such notice.
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ARTICLE XI
APPLICATION OF PAYMENTS
Section 11.1 Consenting Parties; Voting Rights of Lessor Parties in
Connection with Direction of the Agent.
(a) In accordance with Article XIV hereof and subject to
Section 15.5 hereof, all actions taken by the Agent prior to the occurrence and
continuance of a Lease Event of Default, and all amendments, modifications,
consents or approvals with respect to any Operative Documents, shall be taken
solely at the direction of the Consenting Parties. The Lessee and the Guarantor
shall be entitled to rely on all such actions by the Agent and amendments,
modifications, consents and approvals entered into or provided by the Agent as
authorized by the Consenting Parties without inquiry or investigation.
(b) The "Consenting Parties" shall mean, with respect to
amendments, modifications, consents or approvals with respect to any Operative
Document, (i) at any time the Outstanding Lease Balance is greater than $0, the
Note Purchaser and Lessor Parties whose aggregate percentage of the Outstanding
Lease Balance equals or exceeds sixty-six and two-thirds percent (66-2/3%); and
(ii) at any time the Outstanding Lease Balance is $0, the Note Purchaser and
Lessor Parties whose portion of the Aggregate Commitment Amount equals or
exceeds sixty-six and two-thirds percent (66-2/3%). For purposes of calculating
each Lessor Party's percentage of the Outstanding Lease Balance or portion of
the Aggregate Commitment Amount, so long as the Liquidity Banks have an
obligation to fund the Aggregate Note Purchase Commitment pursuant to the
Liquidity Agreement or have purchased the Notes from the Note Purchaser pursuant
to the Asset Purchase Agreement, each Liquidity Bank shall be deemed to hold a
percentage or portion (as applicable) calculated based upon its Percentage as
provided pursuant to the Asset Purchase Agreement. (Thus, for example, if the
Outstanding Lease Balance is $100,000,000, consisting of $3,500,000 (principal
amount) of Equity Investment and $96,500,000 (principal amount) of outstanding
Notes, and each of four Liquidity Banks' Percentage under the Asset Purchase
Agreement is exactly 25%, then the Lessor's percentage of the Outstanding Lease
Balance would be 3.500% and each Liquidity Bank's percentage of the Outstanding
Lease Balance would be 24.125%).
Section 11.2 Application of Payments made by the Lessee and Guarantor
Pursuant to the Operative Documents prior to the Occurrence and Continuance of
any Lease Event of Default. Prior to the occurrence and continuance of any Lease
Event of Default, moneys received by the Lessor (or by the Agent on behalf of
the Lessor), including, without limitation, funds deposited in the Prepayment
Account, shall be applied as follows:
(a) Basic Rent shall be applied pro rata to satisfy the
obligations of the Lessor with respect to the Interest Amount, the Yield Amount,
the Support Amount and any other costs related to the Notes and the Equity
Investment.
(b) Payments made pursuant to Sections 4.3, 4.4, 4.6, 4.8 and
11.4 hereof shall be applied as specified therein.
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(c) All other payments made by the Lessee Parties and proceeds
received under the Letter of Credit pursuant to this Participation Agreement and
the other Operative Documents, unless otherwise specified, shall be applied
first, to repay, in full, the Notes together with any other amounts payable to
the Note Purchaser (or the Liquidity Banks, if applicable) pursuant to the
Operative Documents, ratably in accordance with their respective interests,
second, to redeem the Equity Investment together with any other amounts payable
to the Lessor pursuant to the Operative Documents (provided however, that none
of the proceeds received under the Letter of Credit shall be used for this
purpose), and third, to any other Person as such Person's interest may appear.
Section 11.3 Application of Funds Upon the Occurrence and Continuance
of any Lease Event of Default. Upon the occurrence and continuance of any Lease
Event of Default, moneys received by the Lessor (or by the Agent on behalf of
the Lessor) shall be applied as follows:
(a) Basic Rent shall be applied pro rata to satisfy the
obligations of the Lessor with respect to the Interest Amount, the Yield Amount,
the Support Amount and any other costs related to the Notes and the Equity
Investment.
(b) Payments made pursuant to Sections 4.3, 4.4, 4.6, 4.8 and
11.4 hereof shall be applied as specified therein.
(c) All other payments made by the Lessee Parties and received
as remarketing, casualty, sale, foreclosure or other proceeds pursuant to this
Participation Agreement and the other Operative Documents, shall be applied
first, to repay ratably in full the Notes together with any other amounts
payable to the Note Purchaser (or the Liquidity Banks) pursuant to the Operative
Documents and to redeem the Equity Investment together with any other amounts
payable to the Lessor pursuant to the Operative Documents, and second, to any
other Person as such Person's interest may appear.
Section 11.4 Casualty, Condemnation or Unwind Proceeds. Except to the
extent such amounts are returned to the Lessee pursuant to Sections 14.3(a) and
14.3(f) of the Master Lease, without regard to whether a Lease Default, Lease
Event of Default, Acceleration Event or Unmatured Acceleration Event shall have
occurred and be continuing, Casualty Proceeds, Condemnation Proceeds or Unwind
Proceeds with respect to the Property shall be applied first, to the ratable
repayment in full of the Notes together with any other amounts payable to the
holders of such Notes and second, to the redemption of the Equity Investment,
together with any other amounts payable to the Lessor pursuant to the Operative
Documents.
Section 11.5 Construction of Local Laws. It is acknowledged and agreed
that the foreclosure on the Property may give rise to the application of local
laws which require, inter alia, that the proceeds of such foreclosure(s) be
applied in a manner which is not consistent with the application of proceeds
specified in this Article XI. To the extent such inconsistent applications are
made in accordance with applicable law, the parties hereto agree to reallocate
the remaining proceeds in a manner which gives effect to the allocations
specified in this Article XI.
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ARTICLE XII
ASSIGNMENTS AND TRANSFERS BY LESSOR,
LIQUIDITY BANKS AND NOTE PURCHASER
Section 12.1 Acknowledgment of Grant of Security Interest to the Agent;
Assignments.
(a) The Lessor, the Guarantor and the Lessee hereby
acknowledge that the right of the Lessor to receive Rent and certain other
rights under the Master Lease will be pledged to the Agent to secure payment of
the Notes, the Loans and the Equity Investment in the manner specified in
Article XI. In addition, in accordance with the terms and conditions of the
Liquidity Documentation, the Notes may be transferred to the Liquidity Banks or
otherwise transferred from time to time. Such transfers shall be governed by the
relevant provisions of the Note Purchase Agreement, and this Participation
Agreement, as the context requires.
(b) Each Liquidity Bank may, at any time, sell and assign to
any Eligible Assignee all or any portion of its rights and obligations under
this Participation Agreement and the other Operative Documents in accordance
with the Liquidity Documentation.
Section 12.2 Assignments by Note Purchaser, etc. Provided the same does
not require registration of the Notes under the Securities Act of 1933, as
amended, the Note Purchaser may, without restriction or formality of any kind:
(x) transfer all or part of its rights, obligations and interest in, to and
under the Notes and the Operative Documents to any Lessor Party and grant a
security interest therein to the Collateral Agent for its commercial paper
program; and (y) the Collateral Agent may similarly transfer any interest it so
receives.
Section 12.3 Disclosure of Information. Each Lessor Party may, in
connection with any assignment, sale of a participation, proposed assignment or
proposed sale of a participation by it pursuant to this Article XII, disclose to
the applicable transferee or proposed transferee any information relating to the
Lessee, the Guarantor or the Property in its possession.
Section 12.4 Limitation on Assignment. Except as otherwise provided
above or as contemplated in the Asset Purchase Agreement or Section 15.17
hereof, no Lessor Party shall assign or transfer its rights, obligations or
interest in, to and under the Operative Documents without the written consent of
the Agent and, if no Lease Default or Lease Event of Default has occurred and is
continuing, the Guarantor (which consent of the Agent and the Guarantor shall
not be unreasonably withheld).
ARTICLE XIII
INDEMNIFICATION
Section 13.1 General Indemnification. The Lessee and the Guarantor
jointly and severally agree, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and to indemnify, protect,
defend, save and keep harmless each Indemnitee, on an After Tax Basis, from and
against, any and all Claims that may be imposed on, incurred by or asserted
against such Indemnitee (whether because of action or omission by such
Indemnitee or otherwise), whether or not such Indemnitee shall also be
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indemnified as to any such Claim by any other Person and whether or not such
Claim arises or accrues prior to the Documentation Date or after the Lease
Termination Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in respect
thereof,
(b) the Property or any part thereof or interest therein;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance, rejection,
ownership, management, possession, operation, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, disposition, operation, condition, sale (including any sale
pursuant to Article XVI, XVII or XVIII of the Master Lease), return or other
disposition of all or any part or any interest in the Property or the imposition
of any Lien (or incurring of any liability to refund or pay over any amount as a
result of any Lien) thereon, including (1) 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 restriction, easement, condition or
covenant or other matter affecting title to the Property, including, but not
limited to, the terms set forth in the Redwood Shores Documents, (4) the making
of any Modifications in violation of any standards imposed by any insurance
policies required to be maintained by the Lessee pursuant to the Master Lease
which policies are in effect at any time with respect to the Property or any
part thereof, (5) any Claim for patent, trademark or copyright infringement, and
(6) Claims arising from any public improvements with respect to the Property
resulting in any change or special assessments being levied against the Property
or any plans to widen, modify or realign any street or highway adjacent to the
Property, or any Claim for utility "tap-in" fees;
(d) the breach by the Lessee or the Guarantor of any covenant,
representation or warranty made by it or deemed made by it in any Operative
Document or any certificate required to be delivered by any Operative Document;
(e) the retaining or employment of any broker, finder or
financial advisor by the Lessee to act on its behalf in connection with this
Participation Agreement;
(f) the existence of any Lien on or with respect to the
Property, any improvements, title thereto, any interest therein or any Basic
Rent or Supplemental Rent, including any Liens which arise out of the
possession, use, occupancy, construction, repair or rebuilding of the Property
or by reason of labor or materials furnished or claimed to have been furnished
to the Lessee, or any of its contractors or agents or by reason of the financing
of any personally or equipment purchased or leased by the Lessee or
Modifications constructed by the Lessee, except Lessor Liens and Liens created
under the Operative Documents in favor of one or more of the Lessor Parties;
(g) the transactions contemplated by this Participation
Agreement or by any other Operative Document, in respect of the application of
Parts 4 and 5 of Subtitle B of Title I of ERISA and any prohibited transaction
described in Section 4975(c) of the Revenue Code; or
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(h) any indemnification claim made against any Liquidity Bank
under the Liquidity Documentation;
provided, however, neither the Lessee nor the Guarantor shall be required to
indemnify any Indemnitee under this Section 13.1 for any of the following: (1)
any Claim to the extent resulting from the willful misconduct or gross
negligence of such Indemnitee (it being understood that the Lessee and the
Guarantor shall be required to indemnify an Indemnitee even if the ordinary (but
not gross) negligence of such Indemnitee caused or contributed to such Claim),
(2) any Claim resulting from Lessor Liens to the extent such Indemnitee is in
breach of any obligation under the Operative Documents to discharge such Liens,
(3) any Claim to the extent solely attributable to acts or events attributable
to such Indemnitee and occurring after the return of the Property or the Lease
Termination Date so long as no Lease Default or Lease Event of Default shall
have occurred and be continuing as of the date of such return or the Lease
Termination Date, (4) any Claim arising from a breach by such Indemnitee of any
agreement entered into in connection with the assignment or participation of any
interest of such Indemnitee under this Participation Agreement or the other
Operative Documents, (5) Taxes (other than Taxes necessary for any claim under
this Section 13.1 to be indemnified on an After-Tax Basis) or (6) any Claim
arising solely from the failure of such Indemnitee to comply with laws
applicable to banks or their affiliates generally or the failure of such
Indemnitee to file any notice, report, filing or other document required by any
Governmental Authority regulating banks or their affiliates in connection with
such Indemnitee's execution of, and participation in the transactions
contemplated by, the Operative Documents. It is expressly understood and agreed
that the indemnity provided for herein shall survive the expiration or
termination of, and shall be separate and independent from any remedy under, the
Master Lease or any other Operative Document. Without limiting the express
rights of any Indemnitee under this Section 13.1, this Section 13.1 shall be
construed as an indemnity only and not a guaranty of residual value of the
Property or as a guaranty of the repayment of the Notes or the redemption of the
Equity Investment.
Section 13.2 Environmental Indemnity. Without limitation of the other
provisions of this Article XIII or the Environmental Indemnity Agreement, the
Lessee and the Guarantor hereby agree, jointly and severally, to indemnify, hold
harmless and defend each Indemnitee from and against any and all claims
(including third party claims for personal injury or real or personal property
damage or diminution of value), losses (including, to the extent the Outstanding
Lease Balance and all other Obligations have not been fully paid, any loss of
value of any Property related thereto), damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings (including any informal
proceedings) and all orders, judgments, remedial action, requirements,
enforcement actions of any kind, and all reasonable and documented costs and
expenses incurred in connection therewith (including reasonable and documented
attorneys' and/or paralegals' fees, experts' fees and expenses), including all
costs incurred in connection with any investigation or monitoring of site
conditions or any Remedial Action, arising in whole or in part, out of:
(a) the presence on or under the Property of any Hazardous
Substances, or any Releases or threat of Release or discharges of any Hazardous
Substances on, under, from or onto the Property;
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(b) any Hazardous Activity or activity, including
construction, carried on at the Property, and whether by the Lessee or any
predecessor in title or any employees, agents, contractors or subcontractors of
the Lessee or any predecessor in title, or any other Persons (including such
Indemnitee), in connection with the handling, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any Hazardous Substances
that at any time are Released on, at, from or under or are located or present on
or under the Property,
(c) loss of or damage to any property or the environment
(including Remediation Costs, investigation costs, clean-up costs, response
costs, remediation and removal costs, cost of corrective action, costs of
financial assurance, fines and penalties and natural resource damages and
diminution of value), 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, in
each case arising from activities on or conditions with respect to the Property;
(d) any Governmental Claim, Adverse Environmental Condition or
any other claim concerning lack of compliance with Environmental Laws, or any
act or omission causing an environmental condition that requires remediation or
would allow any Governmental Authority or Person to record a Lien on the land
records, in each case arising from activities on or conditions with respect to
the Property; or
(e) any residual contamination on or under the Property, or
affecting any natural resources, and any contamination of any property or
natural resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Substances from the
Property; and irrespective of whether any of such activities were or will be
undertaken in accordance with applicable laws, regulations, codes and
ordinances;
provided, however, neither the Lessee nor the Guarantor shall be required to
indemnify any Indemnitee under this Section 13.2 for (1) any Claim to the extent
resulting from the willful misconduct or gross negligence of such Indemnitee (it
being understood that the Lessee and the Guarantor shall be required to
indemnify an Indemnitee even if the ordinary (but not gross) negligence of such
Indemnitee caused or contributed to such Claim) or (2) any Claim to the extent
solely attributable to acts or events attributable to such Indemnitee first
occurring after the return of all of the Property on the Lease Termination Date
so long as no Lease Default or Lease Event of Default shall have occurred and be
continuing as of the date of such return or the Lease Termination Date. It is
expressly understood and agreed that the indemnity provided for herein shall
survive the expiration or termination of, and shall be separate and independent
from, any remedy under the Master Lease or any other Operative Document.
Section 13.3 Proceedings in Respect of Claims. With respect to any
amount that Lessee or the Guarantor is requested by an Indemnitee to pay by
reason of Section 13.1 or 13.2, such Indemnitee shall, if so requested by Lessee
or the Guarantor, as applicable, and prior to any payment, submit such
additional information to the Lessee or the Guarantor as such Person may
reasonably request and which is in the possession of or available to such
Indemnitee to substantiate properly the requested payment.
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In case any action, suit or proceeding shall be brought against any
Indemnitee or any Indemnitee receives written notice of any threatened action,
suit or proceeding, such Indemnitee shall with reasonable promptness notify the
Guarantor of the commencement thereof, and the Guarantor shall be entitled, at
its expense, to participate in, and, to the extent that the Guarantor desires
to, assume and control the defense thereof (with counsel reasonably satisfactory
to such Indemnitee) provided, however, that the Guarantor shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee in
respect of such action, suit or proceeding, and the Guarantor 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 shall not be entitled to assume and control the
defense of any such action, suit or proceeding if and to the extent that (A) in
the reasonable opinion of such Indemnitee, (x) such action, suit or proceeding
involves any risk of imposition of criminal liability or will involve any
material risk of the sale, forfeiture or loss of the Property or any part
thereof not stayed during the pendency of the contest or (y) the control of such
action, suit or proceeding by the Guarantor would involve an actual or potential
conflict of interest, (B) such proceeding involves Claims not fully indemnified
by the Lessee and the Guarantor which the Guarantor and the Indemnitee have been
unable to sever from the indemnified claim(s), or (C) a Lease Event of Default
has occurred and is continuing and the Indemnitee notifies the Guarantor that it
does not want the Guarantor to assume and control such defense. The Indemnitee
will undertake all reasonable efforts to join in the Guarantor's efforts to
sever any such action referred to in clause (B) above. The Indemnitee may
participate in a reasonable manner at its own expense (provided that in the case
of clauses (A), (B) or (C) above, the Guarantor shall pay the reasonable
expenses of such Indemnitee) and with its own counsel in any proceeding
conducted by the Guarantor in accordance with the foregoing. The Guarantor shall
not enter into any settlement or other compromise with respect to any Claim
which is entitled to be indemnified under Section 13.l or 13.2 without the prior
written consent of the Indemnitee, which consent shall not be unreasonably
withheld in the case of a money settlement not involving an admission of
liability of such Indemnitee.
Each Indemnitee shall, at the expense of the Guarantor, with reasonable
promptness supply the Guarantor with such information and documents reasonably
requested by the Guarantor as are necessary or advisable for the Guarantor to
participate in and, to the extent permitted hereunder, control any action, suit
or proceeding to the extent permitted by Section 13.1 or 13.2. Unless a Lease
Event of Default shall have occurred and be continuing, no Indemnitee shall
enter into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 13.1 or 13.2 without the prior written
consent of the Guarantor, which consent shall not be unreasonably withheld,
unless such Indemnitee waives its right to be indemnified under Section 13.1 or
13.2 with respect to such Claim.
Upon payment in full, or provision for payment in full reasonably
satisfactory to the Indemnitee, of any Claim by the Lessee or the Guarantor
pursuant to Section 13.1 or 13.2 to or on behalf of an Indemnitee, the
Guarantor, without any further action, shall be subrogated to any and all claims
that such Indemnitee may have relating thereto (other than claims in respect of
insurance policies maintained by such Indemnitee at its own expense), and such
Indemnitee shall execute such instruments of assignment and conveyance, evidence
of claims and payment and such other documents, instruments and agreements as
may be necessary to preserve any such
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claims and otherwise cooperate with the Guarantor and give such further
assurances as are necessary or advisable to enable the Guarantor vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.2
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 13.4 General Tax Indemnity.
(a) Indemnification. The Lessee and the Guarantor, jointly and
severally, shall pay and assume liability for, and do hereby agree to indemnify,
protect and defend the 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 or the Guarantor may have an indemnity obligation pursuant to this
Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to
which the Lessee or the Guarantor may have an indemnity obligation pursuant to
this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any
event, within fifteen (15) Business Days) notify the Guarantor in writing
(provided that failure to so notify the Guarantor within fifteen (15) Business
Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except
to the extent such failure precludes or materially adversely affects the ability
to conduct a contest of any indemnified Taxes) and shall not take any action
with respect to such claim, proceeding or Imposition without the written consent
of the Guarantor (such consent not to be unreasonably withheld or unreasonably
delayed) for thirty (30) days after the receipt of such notice by the Guarantor;
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
the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take
any action with respect to such claim, proceeding or Imposition without the
consent of the Guarantor (such consent not to be unreasonably withheld or
unreasonably delayed) for ten (10) days after the receipt of such notice by the
Guarantor unless such Tax Indemnitee shall be required by law or regulation to
take action prior to the end of such ten (10) day period.
The Guarantor shall be entitled for a period of thirty (30) days from
receipt of such notice from such Tax Indemnitee (or such shorter period as such
Tax Indemnitee has notified the Guarantor is required by law or regulation for
such Tax Indemnitee to commence such contest), to request in writing that such
Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense.
If (x) such contest can be pursued in the name of the Guarantor or the Lessee
and independently from any other proceeding involving a Tax liability of such
Tax Indemnitee for which the Lessee and the Guarantor have not agreed to
indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of
such Tax Indemnitee, but can be pursued independently from any other proceeding
involving a Tax liability of such Tax Indemnitee for which the Lessee and the
Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax
Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to
control the contest of such claim, provided that in the case of a contest
described in
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clause (y) if such Tax Indemnitee determines reasonably and in good faith that
such contest by the Guarantor or the Lessee could have a material adverse impact
on the business or operations of such Tax Indemnitee and provides a written
explanation to the Guarantor of such determination, such Tax Indemnitee may
elect to control or reassert control of the contest, and provided that the
taking control by the Guarantor or the Lessee of any contest shall not alter the
applicable Tax Indemnitee's rights to indemnification hereunder, and provided,
further, that in determining the application of clauses (x) and (y) of the
preceding sentence, each Tax Indemnitee shall take any and all reasonable steps
to segregate claims for any Taxes for which the Lessee and the Guarantor
indemnify hereunder from Taxes for which the Lessee and the Guarantor are not
obligated to indemnify hereunder, so that the Guarantor can control the contest
of the former. In all other claims requested to be contested by the Guarantor,
such Tax Indemnitee shall control the contest of such claim, acting through
counsel selected by such Tax Indemnitee and reasonably acceptable to the
Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax
Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee
provides the Guarantor with a legal opinion of counsel reasonably acceptable to
the Guarantor that such action, suit or proceeding involves a risk of imposition
of criminal liability or will involve a material risk of the sale, forfeiture or
loss of, or the creation of any Lien (other than a Permitted Lien) on the
Property or any part thereof unless the Guarantor shall have posted and
maintained a bond or other security reasonably satisfactory to the relevant Tax
Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred
and is continuing unless the Guarantor shall have posted and maintained a bond
or other security reasonably satisfactory to the relevant Tax Indemnitee in
respect of the Taxes subject to such claim and any and all expenses for which
the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in
connection with the contest of such claim, (C) unless the Guarantor shall have
agreed to pay and shall pay, to such Tax Indemnitee on written demand all
reasonable, documented out-of-pocket costs, losses and expenses that such Tax
Indemnitee may incur in connection with contesting such Imposition including all
reasonable legal, accounting and investigatory fees and disbursements and (if
applicable) reasonable, allocable internal overhead costs determined in
accordance with normal bank operating procedures, or (D) if such contest shall
involve the payment of the Tax prior to the contest, unless the Guarantor shall
provide to such Tax Indemnitee an interest-free advance in an amount equal to
the Imposition that such Tax Indemnitee is required to pay (with no additional
net after-tax costs to such Tax Indemnitee). In addition, for contests
controlled by such Tax Indemnitee and claims contested in the name of such Tax
Indemnitee in a public forum, no contest shall be required: (A) unless the
amount of the potential indemnity (taking into account all similar or logically
related claims that have been or could be raised in any audit involving any or
all such Tax Indemnitees with respect to any period for which the Guarantor or
the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds
(1) with respect to the Lessor, $25,000 and (2) with respect to any Tax
Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such
Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an
opinion of counsel selected by the Guarantor (which may be in-house counsel)
(except, in the case of income taxes indemnified hereunder, in which case such
opinion shall be an opinion of independent tax counsel selected by the Guarantor
and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists
to contest such claim. In no event shall a Tax Indemnitee be required to appeal
an adverse judicial determination to the United States Supreme Court.
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The party conducting the contest shall consult in good faith with the
other party and its counsel with respect to the contest of such claim for Taxes
(or claim for refund) but the decisions regarding what actions to be taken shall
be made by the controlling party in its sole judgment; provided, however, that
if such Tax Indemnitee is the controlling party and the Guarantor recommends the
acceptance of a settlement offer made by the relevant Governmental Authority and
such Tax Indemnitee rejects such settlement offer, then the amount for which a
Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with
respect to the Taxes subject to such offer shall not exceed the amount which it
would have owed if such settlement offer had been accepted provided that any Tax
Indemnitee shall be entitled to reject any indemnity payment it would otherwise
be entitled to hereunder if such Tax Indemnitee reasonably determines that
accepting such offer would have an unindemnified impact on such Tax Indemnitee
and provided further that no Tax Indemnitee may reject any such indemnity
payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such
unindemnified impact, as reasonably determined by such Tax Indemnitee. In
addition, the controlling party shall keep the noncontrolling party reasonably
informed as to the progress of the contest, and shall provide the noncontrolling
party with a copy of (or appropriate excerpts from) any reports or claims issued
by the relevant auditing agents or taxing authority to the controlling party
thereof, in connection with such claim or the contest thereof, provided,
however, that such obligation shall not obligate any Tax Indemnitee to disclose
its tax returns or information or documentation unrelated to such claim or
contest.
Each Tax Indemnitee shall, at the expense of the Lessee and the
Guarantor, supply the Lessee or the Guarantor with such information and
documents reasonably requested by the Lessee or the Guarantor as are necessary
or advisable for such Person to participate in any action, suit or proceeding to
the extent permitted by this Section 13.4(b); provided, however, that such Tax
Indemnitee shall not be required to provide to such Lessee or the Guarantor
copies of its tax returns or any other information, documentation, or materials
that it deems to be confidential or proprietary. Notwithstanding anything in
this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any
settlement or other compromise or fail to appeal an adverse ruling with respect
to any claim which is entitled to be indemnified under this Section 13.4 (and
with respect to which contest is required under this Section 13.4(b)) without
the prior written consent of the Guarantor, unless such Tax Indemnitee waives
its right to be indemnified under this Section 13.4 with respect to such claim.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee shall not be required to contest (and neither the Lessee nor the
Guarantor shall be permitted to contest in any judicial forum if such contest
could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a
claim with respect to the imposition of any Tax if such Tax Indemnitee shall
have waived its right to indemnification under this Section 13.4 with respect to
such claim (and any claim with respect to such year or any other taxable year
the contest of which is precluded or materially adversely affected as a result
of such waiver).
(c) Reimbursement. If (x) a Tax Indemnitee or any Affiliate
thereof actually realizes a refund or reduction of any Taxes in respect of which
the Lessee or the Guarantor has paid an indemnity pursuant to this Section 13.4
or (y) by reason of the incurrence or imposition of any Tax (or the
circumstances or event giving rise thereto) for which a Tax Indemnitee was
indemnified hereunder or any payment made to or for the account of such Tax
Indemnitee by the
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Lessee or the Guarantor pursuant to this Section 13.4 or any payment made by a
Tax Indemnitee to the Lessee or the Guarantor by reason of this Section 13.4(c),
such Tax Indemnitee at any time actually realizes a reduction in any Taxes for
which neither the Lessor nor the Guarantor are required to indemnify such Tax
Indemnitee pursuant to this Section 13.4, which reduction in Taxes was not taken
into account in computing such payment by the Lessee and the Guarantor to or for
the account of such Tax Indemnitee or by such Tax Indemnitee to the Lessee and
the Guarantor, any such refund or reduction to be determined without regard to
Income Tax Savings, then such Tax Indemnitee shall promptly pay to the Guarantor
(xx) the amount of the net tax savings refund, together with the amount of any
interest received by such Tax Indemnitee on account of such refund or (yy) an
amount equal to such reduction in Taxes, as the case may be, in either case
together with an amount equal to any reduced Taxes payable by such Tax
Indemnitee as a result of such payment; provided that no such payment shall be
made so long as a Lease Default or Lease Event of Default shall have occurred
and be continuing, but shall be paid promptly after cure of such Lease Default
or Lease Event of Default. Notwithstanding the foregoing, no Tax Indemnitee
shall be required to make any payment to the Guarantor or the Lessee pursuant to
this Section 13.4(c) to the extent such payment would exceed, in the aggregate
at any time, the amount of all prior payments made by or on behalf of the Lessee
and the Guarantor to such Tax Indemnitee and/or its Affiliates pursuant to this
Section 13.4 that gave rise to such refund or reduction in Taxes. Each Tax
Indemnitee agrees to take such actions as the Guarantor may reasonably request
(provided, in the reasonable good faith judgment of such Tax Indemnitee, such
actions would not result in an adverse effect on such Tax Indemnitee for which
such Tax Indemnitee is not entitled to indemnification from such Lessee and the
Guarantor) and to otherwise act in good faith to claim such refunds and other
available Tax benefits, and take such other actions as may be reasonable to
minimize any payment due from the Lessee and the Guarantor pursuant to this
Section 13.4 and to maximize the amount of any Tax savings available to the
Lessee and the Guarantor. The disallowance or reduction of any refund or other
Tax savings with respect to which a Tax Indemnitee has made a payment to the
Lessee under this Section 13.4(c) shall be treated as a Tax for which the Lessee
is obligated to indemnify such Tax Indemnitee hereunder without regard to the
exclusions set forth in the definition of "Impositions" except the exclusions
set forth in clauses (iv), (v), (vii), (ix) and (xii) of such definition.
(d) Payments. Any Imposition indemnifiable under this Section
13.4 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 Section 13.4 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 this Section 13.4 shall be
made directly to such Tax Indemnitee entitled thereto or the Guarantor, as the
case may be, in immediately available funds at such bank or to such account as
specified by the payee in written directions to the payor, or, if no such
direction shall have been given, by check of the payor payable to the order of
the payee by certified mail, postage prepaid at its address as set forth in
Schedule I hereto. Upon the request of any Tax Indemnitee with respect to a Tax
that the Guarantor or the Lessee is required to pay, the Guarantor or the
Lessee, as the case may be, shall furnish to such Tax Indemnitee the original or
a certified copy of a receipt for such Person's payment of such Tax or such
other evidence of payment as is reasonably acceptable to such Tax Indemnitee.
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(e) Reports. In the case of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 13.4 and of which the Guarantor or the Lessee
has knowledge, the Guarantor or the Lessee, as the case may be, shall promptly
notify such Tax Indemnitee of such requirement and, at the expense of the
Guarantor and the Lessee (i) if the Guarantor or the Lessee, as the case may be,
is permitted (unless otherwise requested by such Tax Indemnitee) by Applicable
Law, timely file such report, return or statement in its own name or (ii) if
such report, return or statement is required to be in the name of or filed by
such Tax Indemnitee or such Tax Indemnitee otherwise requests such report,
return or such statement for filing by such Tax Indemnitee in such manner as
shall be satisfactory to such Tax Indemnitee and send the same to such Tax
Indemnitee for filing no later than fifteen (15) days prior to the due date
therefor. In any case in which such Tax Indemnitee will file any such report,
return or statement, the Guarantor or the Lessee shall, upon written request of
such Tax Indemnitee, provide such Tax Indemnitee with such information as is
reasonably necessary to allow such Tax Indemnitee to file such report, return or
statement.
(f) Verification. At the request of the Guarantor or the
Lessee, the amount of any indemnity payment by the Lessee or the Guarantor or
any payment by a Tax Indemnitee to the Lessee or the Guarantor pursuant to this
Section 13.4 shall be verified and certified by an independent public accounting
firm mutually acceptable to the Lessee or the Guarantor and such Tax Indemnitee.
The costs of such verification shall be borne by the Lessee or the Guarantor
unless such verification shall result in an adjustment in favor of the Lessee or
the Guarantor in an amount greater than the lesser of (i) $10,000, and (ii) ten
percent (10%) of the payment as computed by such Tax Indemnitee, in which case
such fee shall be paid by such Tax Indemnitee. In no event shall the Guarantor
or the Lessee have the right to review such Tax Indemnitee's tax returns or
receive any other confidential information from such Tax Indemnitee in
connection with such verification. Any information provided to such accountants
by any Person shall be and remain the exclusive property of such Person and
shall be deemed by the parties to be (and the accountants will confirm in
writing that they will treat such information as) the private, proprietary and
confidential property of such Person, and no Person other than such Person and
the accountants shall be entitled thereto and all such materials shall be
returned to such Person. Such accounting firm shall be requested to make its
determination within thirty (30) days of the Guarantor's or the Lessee's request
for verifications and the computations of the accounting firm shall be final,
binding and conclusive upon the Guarantor, the Lessee and such Tax Indemnitee
absent manifest error. The parties agree that the sole responsibility of the
independent public accounting firm shall be to verify the amount of a payment
pursuant to the Operative Documents and that matters of interpretation of the
Operative Documents are not within the scope of the independent accounting
firm's responsibilities.
(g) Tax Ownership. Each Tax Indemnitee represents and warrants
that except as actually required by law it will (i) not claim ownership of (or
any tax benefits, including depreciation, with respect to) the Property for any
income tax purposes, it being understood that the Lessee is and will remain the
owner of the Property leased under the Master Lease for such income tax purposes
and (ii) treat all Notes and all portions of the Equity Investment as
Indebtedness of the Lessee for federal income tax purposes; provided that this
sentence shall not preclude the Lessor from claiming ownership of, and any tax
benefits with respect to, the Property for periods beginning after (x) the
Property has been returned to the Lessor pursuant to the Lessee's exercise of
the Remarketing Option or (y) the Lessor has exercised remedies under
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Section 17.3 of the Master Lease and foreclosed or otherwise sold the Property
pursuant to such exercise. If, notwithstanding the income tax intentions of the
parties as set forth herein, any Tax Indemnitee actually receives any income tax
deductions, reductions in income tax or other income tax benefits (collectively,
"Income Tax Savings") as a result of any claim for, or recharacterization
requiring such party to take, any tax benefits attributable to ownership of the
Property for income tax purposes, such Tax Indemnitee shall pay to the
Guarantor, together with an amount equal to any reduced Taxes payable by such
Tax Indemnitee as a result of such payment, the amount of such Income Tax
Savings actually realized by such Tax Indemnitee (less the amount of any
anticipated increase in income tax which is payable as a result of such claim or
recharacterization), provided that the Guarantor and the Lessee shall agree to
reimburse such Tax Indemnitee for any subsequent increase in such Tax
Indemnitee's income taxes resulting from such claim or recharacterization not
taken into account in the payment made to the Guarantor, up to the net amount
paid to the Guarantor by each Tax Indemnitee and provided further, that no Lease
Default or Lease Event of Default shall have occurred and be continuing. The
parties agree that this Section 13.4(g) is intended to require a Tax Indemnitee
to make a payment to the Guarantor if and only if such Tax Indemnitee shall have
actually received any net unanticipated Income Tax Savings with respect to the
Property that would not have been received if such Tax Indemnitee had advanced
funds to the Lessee under an arrangement properly characterized for federal
income tax purposes as a loan secured by the Property in an amount equal to such
Tax Indemnitee's portion of the Outstanding Lease Balance. Nothing in this
Section 13.4(g) shall be construed to require any Tax Indemnitee to take any
affirmative action to realize any Income Tax Savings if in its sole discretion,
exercised in good faith, such action may have a material adverse effect on such
Tax Indemnitee (including as a result of such position being or being viewed as
materially inconsistent with any other tax position claimed by such Tax
Indemnitee for the relevant period or periods).
Section 13.5 Indemnity Payments in Addition to Master Lease
Obligations. Each of the Lessee and the Guarantor acknowledges and agrees that
the obligations of the Lessee and the Guarantor to make indemnity payments under
this Article XIII are separate from, in addition to, and do not reduce (i) the
Lessee's obligations under the Master Lease and (ii) without duplication, the
indemnities provided in Article IV hereof.
Section 13.6 Indemnity Under Construction Agency Agreement. The Lessor
hereby acknowledges and agrees for the benefit of the other Lessor Parties that
to the extent the Lessor is indemnified by any Lessee Party pursuant to Section
8.1 of the Construction Agency Agreement, the rights and benefits of the Lessor
derived pursuant to any such indemnification shall pass through to, and be for
the benefit of, any Lessor Party otherwise entitled to such indemnification
pursuant to this Article XIII.
ARTICLE XIV
AGENT; PLEDGED PROPERTY
Section 14.1 Appointment and Duties of the Agent.
(a) The Lessor Parties (excluding the Agent) hereby designate
and appoint KeyBank to act as the Agent under the Operative Documents, and such
parties hereby authorize
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the Agent to take such actions on their behalf under the provisions of the
Operative Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of the Operative Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the Operative
Documents, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein or in the other Operative Documents, or any fiduciary
relationship with the other Lessor Parties and no implied covenants, functions
or responsibilities shall be read into the Operative Documents, or otherwise
exist against the Agent. The Agent shall not be liable for any action taken or
omitted to be taken by it hereunder or under any other Operative Document, or in
connection herewith or therewith, unless caused by its gross negligence or
willful misconduct.
(b) The Agent shall not exercise any rights or remedies under
any of the Operative Documents or give any consent or approve as satisfactory to
it any matters requiring such approval under any of the Operative Documents or
enter into any agreement amending, modifying, supplementing or waiving any
provision of any Operative Document unless it shall have been directed to do so
in writing by the requisite percentages required under the Operative Documents
or, in the absence of an express provision, by the Consenting Parties. The
Lessor and the Guarantor shall be entitled to assume, and rely on such
assumption, that the Agent will be in compliance with the preceding sentence at
all times during which this Participation Agreement and the other Operative
Documents are in effect.
(c) The Agent will prepare continuation statements for the
Financing Statements and the Precautionary Financing Statements. The costs of
such continuation statements shall be paid by the Guarantor.
(d) The Agent shall promptly notify the other Lessor Parties
of any communication it receives from a Lessee Party, and shall promptly provide
the other Lessor Parties with copies of any documents it receives from a Lessee
Party relating to the Overall Transactions.
Section 14.2 Rights of the Agent.
(a) The Agent may execute any of its duties pursuant to the
Operative Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
(b) Neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall (i) be liable for any
action lawfully taken or omitted to be taken by it under or in connection with
any Operative Document or this Participation Agreement except for its gross
negligence or willful misconduct, or (ii) be responsible in any manner to any
Transaction Party for any recitals, statements, representations or warranties
made by the Lessee or the Guarantor or any representative thereof contained in
any Operative Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent or in
connection with, any Operative Document or this Participation Agreement or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of the Operative Documents or this Participation Agreement or for any failure of
the Guarantor or the Lessee to
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perform their obligations thereunder. The Agent shall not be under any
obligation to any Transaction Party to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, any Operative Document or this Participation Agreement, or to inspect the
properties, books or records of the Lessee or the Guarantor.
(c) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. In connection with any
request of a Transaction Party, the Agent shall be fully justified in failing or
refusing to take action under any Operative Document or this Participation
Agreement (i) if such action would, in the reasonable opinion of the Agent, be
contrary to law or the terms of this Participation Agreement or the other
Operative Documents, (ii) if such action is not specifically provided for in
such Operative Document or this Participation Agreement and it shall not have
received the consent or concurrence it deems appropriate or, (iii) if, in
connection with taking of any such action that would constitute an exercise of
remedies under such Operative Document or this Participation Agreement, it shall
not first be indemnified to its satisfaction against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under any Operative Document or this Participation
Agreement in accordance with any such request, and such request and any action
taken or failure to act pursuant thereto shall be binding upon the other
Transaction Parties.
(d) The Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
Lease Event of Default unless and until it has received a written notice or a
certificate from a Transaction Party stating that a Lease Event of Default has
occurred under the Operative Documents. The Agent shall have no obligation
whatsoever either prior to or after receiving such notice or certificate to
inquire whether a Lease Event of Default has in fact occurred and shall be
entitled to rely conclusively, and shall be fully protected in so relying, on
any such notice or certificates furnished to it. No provision of this
Participation Agreement or any other Operative Document shall require the Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or under any Operative Document
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(e) To the extent that such expenses shall not be reimbursed
by the Lessee or the Guarantor where so required by the terms of the Operative
Documents, the Agent shall be entitled to reimbursement from the other Lessor
Parties (other than the Note Purchaser, the Conduit Agent and the Program
Administrator) for reasonable out-of-pocket expenses, including the reasonable
fees and expenses of its counsel (and any local counsel) and of any experts and
agents, which the Agent may reasonably incur in connection with (i) the
administration of this Participation Agreement and the other Operative
Documents, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, the Property or the Related Security, or (iii) the
exercise or enforcement (whether through negotiations, legal proceedings or
otherwise)
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of any of the rights of the Agent or the other Transaction Parties hereunder or
under the other Operative Documents.
(f) Notwithstanding any provision herein or in any other
Operative Document to the contrary, with the exception of Section 14.2(b), the
Agent shall not be entitled to any payment or collection from any other Lessor
Parties, but for all fees, expenses and indemnities irrevocably agrees to look
solely and exclusively to the Lessee and the Guarantor.
Section 14.3 Lack of Reliance on the Agent. Each of the Transaction
Parties represents to the Agent that it has, independently and without reliance
upon the Agent and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into the
transactions contemplated by the Operative Documents. Each such party also
represents that it will, independently and without reliance upon the Agent, and
based on such documents and information as it shall deem appropriate at the time
continue to make its own credit decisions with respect to this Participation
Agreement or any of the other Operative Documents.
Section 14.4 Resignation of the Agent. The Agent may resign as Agent
upon thirty (30) days' notice to the Transaction Parties, with any such
resignation to become effective only upon the appointment of a successor Agent
hereunder. If the Agent shall resign as Agent, the Note Purchaser shall appoint
a successor Agent, subject to the consent of the Guarantor if no Lease Event of
Default exists (which consent shall not be unreasonably withheld) and the
consent of the Liquidity Banks. If no successor Agent shall have been so
appointed within thirty (30) days, the resigning Agent or any Lessor Party may
petition any court of competent jurisdiction for the appointment of a new Agent.
Upon the appointment of a successor agent pursuant to this Section 14.4, such
successor agent shall succeed to the rights, powers and duties of the "Agent,"
and the term "Agent" shall mean such successor agent, and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any other Lessor
Parties. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Participation Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
Section 14.5 Successor Agent by Merger. If the Agent consolidates with,
merges or converts into, or transfers substantially all of its assets to another
corporation, the resulting, surviving or transferee corporation, without any
further action, shall be the successor Agent.
Section 14.6 Eligibility of the Agent The Agent shall at all times have
a combined capital and surplus of at least $100,000,000 (or a combined capital
and surplus in excess of $50,000,000 and the obligations of which, whether or
not in existence or hereafter incurred, are fully and unconditionally guaranteed
by a corporation organized and doing business under the laws of the United
States, any state or territory thereof or the District of Columbia that has a
combined capital and surplus of at least $100,000,000). If such corporation
publishes reports of condition at least annually, pursuant to law or to
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 14.6, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. The Agent shall not be an Affiliate of the Guarantor or the Lessee.
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Section 14.7 Collection of Payments Notwithstanding anything in this
Participation Agreement, the Master Lease or the other Operative Documents to
the contrary, all payments under this Participation Agreement, the Master Lease
or under the other Operative Documents, including but not limited to, payments
of Basic Rent, Supplemental Rent, Purchase Option Price, Remarketing Proceeds or
Maximum Recourse Amount by the Lessee or the Guarantor under this Participation
Agreement, the Master Lease or the other Operative Documents shall be made
directly to the Agent and not the Lessor. The Agent shall immediately remit such
amounts in accordance with the terms of Article XI of this Participation
Agreement or, to the extent such funds cannot be remitted immediately, shall
deposit such funds into an Eligible Account for distribution as soon as possible
in accordance with the terms of Article XI of this Participation Agreement.
Unless specifically provided herein or in any other Operative Documents that
such payment is to be made directly to a particular Lessor Party or any other
Person, upon payment by the Lessee (or the Guarantor) to the Agent of an amount
required to be paid under the Operative Documents, the Lessee (or the Guarantor)
shall be deemed to have satisfied its obligation with respect to such payment
and neither the Lessee nor the Guarantor shall have any liability or
responsibility for the Agent's failure or delay in remitting such amount to the
Person or Persons entitled thereto.
Section 14.8 Pledged Property
(a) Grant of Security Interest in Pledged Property. In
furtherance and not in limitation of any provisions of the Conveyance
Instruments, the Lessor does hereby grant, bargain, sell, convey, mortgage,
assign, transfer and warrant to the Agent under the Operative Documents for the
benefit of the Lessor Parties (other than the Lessor), as their respective
interests may appear, a continuing first security interest in and to all right,
title and interest of the Lessor not otherwise conveyed to the Agent pursuant to
the Conveyance Instruments executed by the Lessor in favor of the Agent for the
benefit of the Lessor Parties (other than the Lessor), whether now owned, or
hereafter acquired, in and to the Collateral, including, without limitation, all
right, title and interest in and to any accounts maintained from time to time by
the Agent in which the proceeds of any payments made to or for the account of
the Lessor may be deposited from time to time (such property, rights and
interests being hereinafter collectively called the "Pledged Property") to
secure the repayment of the Secured Obligations
(b) Duty of Care. The Agent shall exercise reasonable care in
the custody and preservation of Pledged Property in its actual possession. At
any time and from time to time, the Agent may at its option file in any
jurisdiction, at the expense of the Guarantor, one or more financing,
continuation and similar statements, and any amendments thereto, with or (to the
extent permitted by Applicable Law) without the signature of the Lessor or the
Guarantor, as the case may be, covering any or all of the Pledged Property. Each
of the Lessor and the Guarantor hereby agrees to join with the Agent at the
Agent's request in executing any such statements and amendments.
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ARTICLE XV
MISCELLANEOUS
Section 15.1 Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
transfer of the Property to the Lessor, the construction of the Improvements and
any disposition of any interest of the Lessor in the Property and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Documents. The indemnities of the parties
provided for in the Operative Documents shall survive the termination of any
Operative Documents.
Section 15.2 No Broker, etc. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Participation Agreement or
the transactions contemplated herein, nor has it authorized any broker, finder
or financial adviser retained or employed by any other Person so to act. Any
party who is in breach of this representation shall indemnify and hold the other
parties harmless from and against any liability arising out of such breach of
this representation.
Section 15.3 Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon any
Transaction Party under this Participation Agreement or the other Operative
Documents shall be in writing and faxed, mailed or delivered, if to such Person,
at its respective facsimile number or address set forth on Schedule I hereto
specified beneath the heading "Address for Notices" under the name of such
Transaction Party (or to such other facsimile number or address for any party as
indicated in any notice given by that party to the other parties). All such
notices and communications shall be effective (a) when sent by Federal Express
or other overnight service of recognized standing, on the Business Day following
the deposit with such service; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation
of receipt; provided, however, that any Funding Notice, Early Termination
Notice, Purchase Notice or Remarketing Notice shall not be effective until
received by the Lessor or the Agent. Each Funding Notice, Early Termination
Notice, Purchase Notice and Remarketing Notice shall be given by the Lessee to
the Agent's office located at its address referred to above during its normal
business hours; provided, however, that any such notice received by the Agent on
any Business Day after the time specified in the applicable Operative Document
for the giving of such notice (or, if no such time is specified, after 2:00
p.m.) shall be deemed received by the Agent on the next Business Day. In any
case where this Participation Agreement authorizes notices, requests, demands or
other communications by the Lessee or the Guarantor to any Lessor Party to be
made by telephone or facsimile, any Lessor Party may conclusively presume that
anyone purporting to be a person designated in any incumbency certificate or
other similar document received by such Lessor Party is such a person.
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
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original, but all such counterparts shall together constitute but one and the
same instrument. Delivery of an executed signature page hereto by facsimile or
other electronic means shall be equally effective as delivery of an original
signature page.
Section 15.5 Amendments. Except as otherwise provided pursuant to
Section 11.1 hereof, any term, covenant, agreement or condition of this
Participation Agreement or any other Operative Document may be amended or waived
if such amendment or waiver is in writing and is signed by the Lessor, the
Lessee, the Guarantor (if the Guarantor is a party to such Operative Document)
and the Consenting Parties; provided, however that:
(a) any amendment, waiver or consent which (i) increases the
Aggregate Commitment Amount or the Aggregate Note Purchase Commitment, (ii)
extends the Maturity Date, (iii) reduces the amount of Basic Rent or any other
amounts to be paid by the Lessee under the Master Lease or any other Operative
Documents or any fees or other amounts payable for the account of the Lessor
Parties hereunder or thereunder, (iv) postpones any date scheduled for any
payment of Basic Rent or any other amounts or any fees or other amounts payable
for the account of the Lessor Parties hereunder or thereunder, (v) amends
Article XI or this Section 15.5, (vi) amends the definition of "Consenting
Parties", (vii) releases the Lessor's interest in any material part of the
Property, (viii) releases the Lessee from its indemnity obligations under the
Operative Documents, or (ix) releases the Guarantor from its obligations under
the Guaranty, must be in writing and signed or approved in writing by all of the
Lessor Parties;
(b) any amendment, waiver or consent which increases or
decreases the Commitment of any Lessor Party must be in writing and signed by
such Lessor Party;
(c) any amendment, waiver or consent which affects the rights
or obligations of the Agent or any Liquidity Bank must be in writing and signed
by the Agent or such Liquidity Bank, as applicable;
(d) any amendment, waiver or consent which affects the rights
or obligations of the Note Purchaser must be in writing and signed by the Note
Purchaser; and
(e) any amendment, waiver or consent which terminates this
Participation Agreement or any other Operative Document (except upon payment in
full of the Outstanding Lease Balance and all other Obligations or the effective
exercise and consummation of the Remarketing Option with respect to the Property
in accordance with Article XVIII of the Master Lease and payment in full of all
amounts due in accordance therewith), must be in writing and signed by each
Transaction Party.
Section 15.6 Headings, etc. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 15.7 Parties in Interest. Except as expressly provided herein,
none of the provisions of this Participation Agreement is intended for the
benefit of any Person except the Transaction Parties. Neither the Lessee nor the
Guarantor shall assign or transfer any of its rights or obligations under the
Operative Documents without the prior written consent of the Transaction
Parties. Except as provided in Section 12.1, the Lessor shall not assign or
transfer
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any of its rights or obligations under the Operative Documents without the prior
written consent of the Consenting Parties and, so long as no Lease Default or
Lease Event of Default shall have occurred and be continuing, the Guarantor
(which consent, in each case, shall not be unreasonably withheld).
Section 15.8 Governing Law. THIS PARTICIPATION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF
THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
Section 15.9 Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 15.10 Liability Limited. None of the Lessor Parties shall have
any obligation to any other party hereto with respect to transactions
contemplated by the Operative Documents, except those obligations of such Person
expressly set forth in the Operative Documents or except as set forth in the
instruments delivered in connection therewith, and none of the Lessor Parties
shall be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
Section 15.11 Further Assurances. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole expense of
the Lessee and the Guarantor, 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 preserve the security interests and liens (and the
priority thereof) intended to be created pursuant to this Participation
Agreement, the other Operative Documents, and the transactions thereunder
(including the preparation, execution and filing of any and all Uniform
Commercial Code financing statements and other filings or registrations which
the parties hereto may from time to time request to be filed or effected). The
Lessee and the Guarantor, upon the written request from any other party to this
Participation Agreement, shall take such action as may be necessary (including
any action specified in the preceding sentence), as so requested, in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Document. Expenses relating to any action to be taken by the
Guarantor or the Lessee pursuant to the preceding sentence shall be the
responsibility of the Guarantor and the Lessee; provided, however, that expenses
relating to any such action with respect to any Lessor Lien shall be paid (or be
promptly reimbursed to the Guarantor or the Lessee, as applicable) by the party
requesting such action.
Section 15.12 Submission to Jurisdiction. The Lessee and the Guarantor
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Northern District of California for purposes of all legal
proceedings arising out of or relating to the Operative Documents or the
transactions contemplated hereby. The Lessee and the Guarantor each irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or
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hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Section 15.13 Waiver of Jury Trial. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY OF THE PARTIES HERETO. THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT
SEEK TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER LITIGATION IN WHICH A
JURY TRIAL HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF THIS SECTION 15.13
HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO NO
EXCEPTIONS. EACH OF THE LESSEE AND THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER OPERATIVE DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LESSOR PARTIES ENTERING
INTO THIS PARTICIPATION AGREEMENT AND EACH SUCH OTHER OPERATIVE DOCUMENT.
Section 15.14 No Bankruptcy Petition Against the Note Purchaser. Each
Transaction Party hereby covenants and agrees, on behalf of itself and each of
its Affiliates, with the Note Purchaser that, prior to the date which is one
year and one day after the payment in full of all commercial paper or other
Indebtedness issued by the Note Purchaser, it will not institute against, or
join any other Person in instituting against, the Note Purchaser any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the law of the United States or any state of the
United States.
Section 15.15 Limited Recourse to the Note Purchaser and the Lessor.
(a) Notwithstanding anything to the contrary contained in this
Participation Agreement or any other Operative Document, the obligations of the
Note Purchaser under this Participation Agreement and the other Operative
Documents are solely the corporate obligations of the Note Purchaser and, with
respect to claims made by any other Lessor Party, shall be payable solely to the
extent of funds or property received from the Lessee and/or the Guarantor in
accordance with this Participation Agreement and the other Operative Documents;
provided, however, that the foregoing obligations shall constitute a claim (as
defined in Section 101 of the Bankruptcy Code) upon the Note Purchaser only to
the extent of such funds or property actually received by the Note Purchaser and
not required to repay Commercial Paper. No recourse shall be had for the payment
of any amount owing hereunder or any other obligation or claim arising out of or
based upon this Participation Agreement or any other Operative Document against
any present or former stockholder, manager, member, employee or officer of the
Note Purchaser or, unless such obligation or claim arises from the gross
negligence or willful misconduct of the Note Purchaser, in such capacity or any
employee, officer or director thereof; provided, however,
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that the foregoing shall not relieve any such person or entity from any
liability they might otherwise have as a result of fraudulent actions or
omissions taken by them.
(b) Notwithstanding anything to the contrary contained in this
Participation Agreement or any other Operative Document, the obligations of the
Lessor under this Participation Agreement and the other Operative Documents
(including, without limitation, the Notes) are solely the corporate obligations
of the Lessor and, with respect to claims made by any other Lessor Party, shall
be payable solely to the extent of funds or property received from the Lessee
and/or the Guarantor in accordance with this Participation Agreement and the
other Operative Documents or advanced or to be advanced pursuant to the Equity
Investment; provided, however, that the foregoing obligations shall constitute a
claim (as defined in Section 101 of the Bankruptcy Code) upon the Lessor only to
the extent of such funds or property actually received by the Lessor and not
required to repay Notes. No recourse shall be had for the payment of any amount
owing hereunder or any other obligation or claim arising out of or based upon
this Participation Agreement or any other Operative Document against any present
or former stockholder, manager, member, employee or officer of the Lessor or,
unless such obligation or claim arises from the gross negligence or willful
misconduct of the Lessor, in such capacity or any employee, officer or director
thereof; provided, however, that the foregoing shall not relieve any such person
or entity from any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them.
(c) Each Transaction Party agrees that neither the Program
Administrator nor the Conduit Agent shall have any liability hereunder as the
Program Administrator or the Conduit Agent, as the case may be, for the Note
Purchaser or otherwise following its ceasing to act as Program Administrator or
the Conduit Agent for the Note Purchaser.
Section 15.16 Confidentiality. No Lessor Party shall disclose to any
Person any information with respect to the Guarantor or the Lessee which is
furnished pursuant to this Participation Agreement or under any other Operative
Document, except that any Lessor Party may disclose any such information (a) to
its own directors, officers, employees, auditors, counsel and other advisors and
to its Affiliates; (b) to any other Lessor Party; (c) which is otherwise
available to the public; (d) if required or appropriate in any report, statement
or testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over such Lessor Party; (e) if required in response to any summons
or subpoena; (f) in connection with any litigation relating to the Operative
Documents or the transactions contemplated thereby; (g) to comply with any
Requirement of Law applicable to such Lessor Party; (h) to any assignee,
participant or any prospective assignee or participant, provided that such
Person agrees to be bound by this Section 15.16; or (i) otherwise with the prior
consent of the Guarantor or the Lessee; provided, however, that any disclosure
made in violation of this Participation Agreement shall not affect the
obligations of the Guarantor or the Lessee under this Participation Agreement
and the other Operative Documents.
Section 15.17 Request for Extension of Expiration Date; Replacement of
Non-Consenting Liquidity Banks.
(a) If, eight (8) months prior to the Maturity Date, the
Maturity Date is still scheduled to occur six (6) months after the then current
Expiration Date as set forth in the
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Liquidity Agreement, the Lessee shall, not later than the date occurring seven
(7) months prior to the Maturity Date, request that the Liquidity Banks extend
the then scheduled Expiration Date to the Maturity Date. In addition, if the
Lessee has exercised the Renewal Option pursuant to Section 18.2 of the Master
Lease, the Lessee shall also request (in a manner provided in Section 18.2 of
the Master Lease) that the Liquidity Banks extend the then scheduled Expiration
Date to the new Maturity Date. (For purposes of this Section 15.17, each such
request shall constitute a "Expiration Date Extension Request".) Pursuant to
Section 3.11 of the Liquidity Agreement, each Liquidity Bank may grant or deny
its consent to such Expiration Date Extension Request in its sole discretion.
Notwithstanding the foregoing, if the Lessee has exercised the Purchase Option
and the purchase of the Property is scheduled to close on or before the
Expiration Date, the Lessee shall not be required to make an Expiration Date
Extension Request.
(b) If one or more Liquidity Banks denies the Lessee's
Expiration Date Extension Request, then the Lessee may give notice in writing to
such Liquidity Bank(s), the Note Purchaser, the Conduit Agent and the Agent of
its intention to replace such Liquidity Bank(s) on or prior to the then
scheduled Expiration Date with an Eligible Assignee designated in such notice.
Any replacement of a Liquidity Bank pursuant to the foregoing provisions must be
acceptable to the Note Purchaser and the Conduit Agent in their sole discretion
(including, without limitation, for rating agency concerns).
(c) The Note Purchaser and the Conduit Agent shall, in the
exercise of their sole discretion and within thirty (30) days of its receipt of
any such notice with respect to one or more of the Liquidity Banks, notify the
Lessee and such Liquidity Bank(s) whether the designated Eligible Assignee is
satisfactory to the Note Purchaser and the Conduit Agent; and, if either shall
fail to give such a notice, the request shall be deemed rejected.
(d) Upon approval of the designated Eligible Assignee as
aforesaid, the Affected Party shall assign its rights and obligations under the
Operative Documents to such Eligible Assignee on or prior to the then scheduled
Expiration Date.
(e) In the event the Note Purchaser and the Conduit Agent does
not approve the replacement of such Liquidity Bank(s) with the designated
Eligible Assignee, the Lessee shall have the option to (i) designate another
Eligible Assignee pursuant to Sections 4.7(a) and 4.7(b) above or (ii) if it is
unable to find another Eligible Assignee, the Lessee shall purchase Notes from
the Note Purchaser in a principal amount, which in relation to the then
outstanding principal amount of the Notes, is equal to the amount in dollars of
the Percentage provided by such Liquidity Bank(s) pursuant to the Asset Purchase
Agreement, whereupon such Liquidity Bank(s) shall cease to be parties to the
Liquidity Documentation and the Expiration Date approved by the remaining
Liquidity Banks shall become effective.
(f) In addition, if eight (8) months prior to the Maturity
Date, the stated maturity date of the Notes is still scheduled to occur six (6)
months prior to the Maturity Date, the Lessee on behalf of the Lessor shall, not
later than the date occurring seven (7) months prior to the Maturity Date,
request that the holder or holders of the Notes extend the then stated maturity
date of the Notes to the Maturity Date. In the event the holder or holders of
the Notes elect not to extend such stated maturity date in such holder's or
holders' sole discretion, the Lessee (without prejudice to its ability to
exercise the Remarketing Option) shall purchase the Notes from such
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holder or holders on or prior to such stated maturity date for an amount equal
to the outstanding balance of such Notes without recourse or representation or
warranties of any kind.
(g) As a condition precedent to any extension of the
Expiration Date or any extension of the stated maturity date of the Notes, the
Letter of Credit Issuer shall extend the expiry date of the Letter of Credit so
that it is conterminous with such new Expiration Date or new maturity date of
the Notes, as applicable.
Section 15.18 Tax Representation; Tax Forms.
(a) Each Lessor Party represents that, except for any
withholding of U.S. federal income tax which results from the adoption of or a
change in applicable law, regulation or, in each case, the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) (including any statute, treaty, ruling or regulation by a governmental,
judicial or taxing authority), with respect to Indebtedness of the Lessee or any
other party to the Operative Documents for federal income tax purposes (and
assuming that the payments of (x) Basic Rent and (y) Purchase Option Price,
Outstanding Lease Balance or Maximum Recourse Amount, as the case may be, are
treated for federal income tax purposes as payments of interest and principal,
respectively), such Lessor Party is entitled to receive any payments to be made
to it by the Lessee or any other party to the Operative Documents without the
withholding of any U.S. federal income tax and will furnish to the Agent upon
the request of the Lessee such certifications, statements and other documents as
are reasonably requested by the Lessee to evidence such Lessor Party's exemption
from the withholding of any U.S. federal income tax or to enable the Lessee to
comply with any applicable laws or regulations relating thereto.
(b) Without limiting the effect of the foregoing Section
15.18(a), if any Lessor Party is not created or organized under the laws of the
United States or any state or political subdivision thereof, such Lessor Party
will furnish to the Agent upon the request of the Lessee, to the extent required
for U.S. federal income tax purposes, Internal Revenue Service Form W-8 BEN or
Form W-8 ECI or any subsequent versions of such forms or successors thereto as
evidence of such Lessor Party's complete exemption from the withholding of U.S.
federal income tax with respect to indebtedness of the Lessee for federal income
tax purposes. Such forms shall be delivered by such Lessor Party (i) on or
before the date such Lessor Party becomes a party to any of the Operative
Documents and promptly before the expiration, obsolescence or invalidity of any
form previously delivered by such Lessor Party and (ii) before or promptly after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Lessee pursuant to this Section 15.18, unless,
in the case of either clause (i) or (ii), as a result of the adoption of or a
change in applicable law, regulation or, in each case, the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) (including any statute, treaty, ruling or regulation by a governmental,
judicial or taxing authority), such Lessor Party is not entitled to provide such
a form. The Agent and the Lessee shall be entitled to rely on such forms in its
possession until receipt of any revised or successor form pursuant to the
preceding sentence.
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(c) For any period with respect to which any Lessor Party is
required under subsection (a) or (b) above to furnish the Agent with the
appropriate forms described in such subsections but has failed to do so (other
than if such failure is due to the adoption of or a change in applicable law as
described in subsection (a) or (b) above), such Lessor Party shall not be
entitled to any indemnification with respect to Impositions under Section 13.4
hereof, additional payments with respect to increased costs under Section 4.4
hereof, or additional payments with respect to Other Taxes under Section 4.6
hereof to the extent that such Impositions, increased costs or Other Taxes are
imposed as a result of such failure.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
ELECTRONIC ARTS REDWOOD, INC.,
as the Lessee
By: ________________________________________
Name: Khuyen Dang
Title: Chief Financial Officer
ELECTRONIC ARTS REDWOOD, INC.,
as the Construction Agent
By: ________________________________________
Name: Khuyen Dang
Title: Chief Financial Officer
ELECTRONIC ARTS, INC.,
as the Guarantor
By: ________________________________________
Name: David L. Carbone
Title: Vice President - Finance
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SELCO SERVICE CORPORATION, doing
business in California as Ohio SELCO Service
Corporation, as the Lessor
By: ________________________________________
Name: Donald Davis
Title: Vice President
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VICTORY RECEIVABLES CORPORATION,
as the Note Purchaser
By: ________________________________________
Name: Rosa Oliveri
Title: Vice President
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KEYBANK NATIONAL ASSOCIATION,
as the Letter of Credit Issuer
By: ________________________________________
Name: Mary K. Young
Title: Vice President
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KEYBANK NATIONAL ASSOCIATION,
as the Agent
By: ________________________________________
Name: Mary K. Young
Title: Vice President
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THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH, as the Conduit Agent
By: ________________________________________
Name: Aditya Reddy
Title: Vice President
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KEYBANK NATIONAL ASSOCIATION,
as a Liquidity Bank
By: ________________________________________
Name: Mary K. Young
Title: Vice President
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THE BANK OF NOVA SCOTIA,
as a Liquidity Bank
By: ________________________________________
Name: Ed Kofman
Title: Director
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BARCLAYS BANK PLC,
as a Liquidity Bank
By: ________________________________________
Name: Marlene Wechselblatt
Title: Vice President
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BNP PARIBAS,
as a Liquidity Bank
By: ________________________________________
Name:
Title:
By: ________________________________________
Name:
Title:
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Appendix A Definitions and Interpretation
Schedule I Contacts, Addresses and Wire Accounts Information
Schedule II Disclosure Schedule of the Lessee and the Guarantor
Exhibit A Legal Description of the Land
Exhibit B-1 Form of Initial Funding Notice
Exhibit B-2 Form of Interim Construction Period Funding Notice
Exhibit B-3 Form of Final Construction Period Funding Notice
Exhibit C Form of Master Lease
Exhibit D Form of Construction Agency Agreement
Exhibit E Form of Guaranty
Exhibit F Form of Environmental Indemnity Agreement
Exhibit G Form of Memorandum of Lease
Exhibit H Form of Precautionary Deed of Trust
Exhibit I Form of Deed of Trust
Exhibit J Form of Opinion of Counsel to Lessee and Guarantor
Exhibit K Form of Assignment of Construction Agreements
Exhibit L Form of Certificate of Responsible Officer - Lessee
Exhibit M Form of Certificate of Responsible Officer - Guarantor
Exhibit N Form of Administration Agreement
Exhibit O Form of Reimbursement Agreement
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ARTICLE I DEFINITIONS; INTERPRETATION................................................. 2
Section 1.1 Definitions; Interpretation............................................... 2
ARTICLE II DOCUMENTATION DATE; FUNDING DATES........................................... 3
Section 2.1 Documentation Date........................................................ 3
Section 2.2 Funding Dates............................................................. 3
ARTICLE III ISSUANCE OF NOTES AND FUNDING OF THE EQUITY INVESTMENT;
PURCHASES OF NOTES; APPLICATION OF PROCEEDS OF NOTES
AND THE EQUITY INVESTMENT................................................... 4
Section 3.1 Commitment of the Lessor to Issue Notes................................... 4
Section 3.2 Commitment of the Lessor to Fund the Equity Investment.................... 5
Section 3.3 Commitment to Make Note Purchases......................................... 5
Section 3.4 Commitment to Fund the Equity Investment.................................. 5
Section 3.5 Notice Procedures with respect to the Funding of Advances under
the Notes and the Equity Investment....................................... 5
Section 3.6 Use of Proceeds of Notes and Equity Investment............................ 7
Section 3.7 Commitment of the Liquidity Banks and Letter of Credit Issuer............. 7
ARTICLE IV CALCULATION OF BASIC RENT AND SUPPLEMENTAL RENT;
DETERMINATION OF NOTE RATE; BREAKAGE EXPENSES, INCREASED
COSTS, ETC.; TAXES; FEES.................................................... 7
Section 4.1 Rent...................................................................... 7
Section 4.2 Calculation of Basic Rent................................................. 8
Section 4.3 Breakage Expenses; Yield Maintenance Premium.............................. 10
Section 4.4 Increased Costs, etc...................................................... 10
Section 4.5 Change of Circumstances................................................... 11
Section 4.6 Taxes..................................................................... 12
Section 4.7 Replacement of Affected Parties........................................... 13
Section 4.8 Fees...................................................................... 14
Section 4.9 Calculation of Interest and Fees.......................................... 14
ARTICLE V CERTAIN INTENTIONS OF THE PARTIES........................................... 15
Section 5.1 Nature of Transaction..................................................... 15
Section 5.2 Amounts Due Under the Master Lease........................................ 16
Section 5.3 Allocation of Payment Obligations; Payment to Agent....................... 16
ARTICLE VI CONDITIONS PRECEDENT TO FUNDING DATES....................................... 17
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Section 6.1 Conditions Precedent to the Initial Funding Date.......................... 17
Section 6.2 Conditions Precedent to all Interim Construction Period Funding
Dates (Except the Final Construction Period Funding Date)................. 22
Section 6.3 Conditions Precedent to Final Construction Period Funding Date............ 23
Section 6.4 Conditions Precedent to all Base Lease Term Funding Dates................. 25
Section 6.5 Closing................................................................... 26
ARTICLE VII REPRESENTATIONS............................................................. 26
Section 7.1 Representations and Warranties of the Lessee and the
Guarantor................................................................. 26
Section 7.2 Representations and Warranties of the Guarantor and
the Lessee as of each Funding Date after the Initial
Funding Date.............................................................. 34
Section 7.3 Representations and Warranties of the Note Purchaser...................... 34
Section 7.4 Representations and Warranties of the Lessor.............................. 35
Section 7.5 Representations and Warranties of each Liquidity Bank
and the Letter of Credit Issuer.................................... 37
ARTICLE VIII COVENANTS................................................................... 38
Section 8.1 Affirmative Covenants of Guarantor and Lessee............................. 38
Section 8.2 Negative Covenants........................................................ 43
Section 8.3 Financial Covenants....................................................... 46
ARTICLE IX COVENANTS OF THE LESSOR, THE NOTE PURCHASER AND THE
LIQUIDITY BANKS............................................................. 47
Section 9.1 General Covenants of the Lessor and the Note
Purchaser.................................................................. 47
Section 9.2 Specific Covenants of the Lessor........................................... 48
Section 9.3 Specific Covenant of the Note Purchaser.................................... 48
Section 9.4 Covenants of the Other Lessor Parties...................................... 48
Section 9.5 Notices Under the Note Purchase Agreement and the
Liquidity Documentation......................................... 49
ARTICLE X PAYMENT OF CERTAIN EXPENSES; OPTIONAL APPRAISALS............................ 49
Section 10.1 Transaction Expenses...................................................... 49
Section 10.2 Stamp Taxes............................................................... 49
Section 10.3 Note Purchase Agreement and Related Obligations........................... 49
Section 10.4 Optional Appraisals....................................................... 49
ARTICLE XI APPLICATION OF PAYMENTS..................................................... 50
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Section 11.1 Consenting Parties; Voting Rights of Lessor Parties
in Connection with Direction of the Agent................................. 50
Section 11.2 Application of Payments made by the Lessee and
Guarantor Pursuant to the Operative Documents prior
to the Occurrence and Continuance of any Lease Event
of Default................................................................ 50
Section 11.3 Application of Funds Upon the Occurrence and
Continuance of any Lease Event of Default................................. 51
Section 11.4 Casualty, Condemnation or Unwind Proceeds................................. 51
Section 11.5 Construction of Local Laws................................................ 51
ARTICLE XII ASSIGNMENTS AND TRANSFERS BY LESSOR, LIQUIDITY BANKS AND
NOTE PURCHASER.............................................................. 52
Section 12.1 Acknowledgment of Grant of Security Interest to the
Agent; Assignments........................................................ 52
Section 12.2 Assignments by Note Purchaser, etc........................................ 52
Section 12.3 Disclosure of Information................................................. 52
Section 12.4 Limitation on Assignment.................................................. 52
ARTICLE XIII INDEMNIFICATION............................................................. 52
Section 13.1 General Indemnification................................................... 52
Section 13.2 Environmental Indemnity.................................................. 54
Section 13.3 Proceedings in Respect of Claims.......................................... 55
Section 13.4 General Tax Indemnity..................................................... 57
Section 13.5 Indemnity Payments in Addition to Master Lease Obligations................ 62
Section 13.6 Indemnity Under Construction Agency Agreement............................. 62
ARTICLE XIV AGENT; PLEDGED PROPERTY..................................................... 62
Section 14.1 Appointment and Duties of the Agent....................................... 62
Section 14.2 Rights of the Agent....................................................... 63
Section 14.3 Lack of Reliance on the Agent............................................. 65
Section 14.4 Resignation of the Agent.................................................. 65
Section 14.5 Successor Agent by Merger................................................. 65
Section 14.6 Eligibility of the Agent.................................................. 65
Section 14.7 Collection of Payments.................................................... 66
Section 14.8 Pledged Property.......................................................... 66
ARTICLE XV MISCELLANEOUS............................................................... 67
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Section 15.1 Survival of Agreements.................................................... 67
Section 15.2 No Broker, etc............................................................ 67
Section 15.3 Notices................................................................... 67
Section 15.4 Counterparts.............................................................. 67
Section 15.5 Amendments................................................................ 68
Section 15.6 Headings, etc............................................................. 68
Section 15.7 Parties in Interest....................................................... 68
Section 15.8 Governing Law............................................................. 69
Section 15.9 Severability.............................................................. 69
Section 15.10 Liability Limited......................................................... 69
Section 15.11 Further Assurances........................................................ 69
Section 15.12 Submission to Jurisdiction................................................ 69
Section 15.13 Waiver of Jury Trial...................................................... 70
Section 15.14 No Bankruptcy Petition Against the Note Purchaser......................... 70
Section 15.15 Limited Recourse to the Note Purchaser and the Lessor..................... 70
Section 15.16 Confidentiality........................................................... 71
Section 15.17 Request for Extension of Expiration Date; Replacement
of Non-Consenting Liquidity Banks......................................... 71
Section 15.18 Tax Representation; Tax Forms............................................. 73
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Appendix A
APPENDIX A
TO
PARTICIPATION AGREEMENT
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
the Operative Documents, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as amended,
supplemented, restated or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms of the other Operative
Documents and reference to any promissory note includes any promissory note
which is an extension or renewal thereof or a substitute or replacement
therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) reference in any Operative Document to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section thereof or Appendix,
Schedule or Exhibit thereto, and reference in any Section or definition
contained in any Operative Document to any clause means such clause of such
Section or definition;
(vii) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to an Operative Document as a whole and not to any
particular Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(ix) relative to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding"; and
APP-1
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Appendix A
(x) "now", "currently", "existing" and other words to that effect
mean the date on which each respective Operative Document has been executed by
all parties thereto.
B. Accounting Terms and Determinations. Unless otherwise specified in
any Operative Document, all accounting terms used therein shall be interpreted,
all accounting determinations thereunder shall be made, and all financial
statements required to be delivered thereunder shall be prepared in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by the
Guarantor's independent public accountants) with the most recent audited
consolidated financial statements of the Guarantor and its Subsidiaries
delivered to the Lessor.
C. Conflict in Operative Documents. If there is any conflict between
any Operative Documents, such Operative Document shall be interpreted and
construed, if possible, so as to avoid or minimize such conflict but, to the
extent (and only to the extent) of such conflict, the Participation Agreement
shall prevail and control.
D. Legal Representation of the Parties. The Operative Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. Defined Terms. Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in each
Operative Document.
"Acceleration Event" is defined in the Note Purchase Agreement.
"Acceptable Condition" is defined in Section 1.1 of the Construction
Agency Agreement.
"Accreted Amount" is defined in Section 3.1(a) of the Participation
Agreement.
"Additional Construction Period Insurance" means the insurance Lessee
is required to maintain and/or cause to be maintained during the Construction
Period pursuant to Section 2.10 of the Construction Agency Agreement.
"Administration Agreement" means that certain Administration Agreement,
substantially in the form of Exhibit N to the Participation Agreement, as the
same may be amended, modified and in effect from time to time.
"Adverse Environmental Condition" means the occurrence of any Hazardous
Condition or any of the matters referred to in the definition of Environmental
Claim.
"Agent" means Key Bank National Association, in such capacity under the
Operative Documents, and its permitted successors and assigns.
"Affected Party" is defined in Section 4.7 of the Participation
Agreement.
"Affiliate" means, as to any Person, any other Person that would be
considered an affiliate of such Person under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the date
hereof, if such Person were issuing securities, by
APP-2
<PAGE>
Appendix A
contract or otherwise. Nothing in the foregoing definition shall be interpreted
to construe that any of the Lessor Parties is an Affiliate of the Guarantor or
Lessee.
"After Tax Basis" means, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient with respect to the receipt by
the recipient of such amounts, such increased payment (after such deduction) is
equal to the payment otherwise required to be made.
"Aggregate Commitment Amount" means the sum of the Aggregate Equity
Investment Commitment and the Aggregate Note Purchase Commitment.
"Aggregate Equity Investment Commitment" is defined in Section 3.2 of
the Participation Agreement.
"Aggregate Note Purchase Commitment" is defined in Section 3.1 of the
Participation Agreement.
"ALTA" means American Land Title Association.
"ALTA Improvements Survey" is defined in Section 6.3(g) of the
Participation Agreement.
"ALTA Land Survey" is defined in Section 6.1(o) of the Participation
Agreement.
"Alternate Rate" means, on any day, the greater of (i) the Prime Rate
in effect on such date and (ii) the Federal Funds Rate for such day plus
one-half percent (0.50%).
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including Environmental Laws), statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority, and applicable judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi judicial tribunal or agency of competent jurisdiction
(including those pertaining to health, safety or the environment, those
pertaining to the construction of Improvements or the use or occupancy of the
Property and those which in any way limit the use or enjoyment thereof), or
common law, in each case affecting the Lessee, the Guarantor or the Property,
and any restrictive covenant or deed restriction or easement of record
encumbering the Property.
"Applicable Margin" means the spread over the one (1) month LIBOR rate
determined by reference to the Guarantor's Consolidated Debt/Tangible Net Worth
Ratio set forth in the following pricing grid:
<TABLE>
<CAPTION>
Total Consolidated Debt/
------------------------
Consolidated Tangible Net Worth LIBOR Margin
------------------------------- ------------
<S> <C>
< than = to 0.33 1.25%
< than = to 0.50 1.50%
< than = to 0.65 1.75%
> 0.65 2.00%
</TABLE>
APP-3
<PAGE>
Appendix A
"Appraisal" means an appraisal of the Property acceptable in form and
substance to the Lessor Parties in their sole discretion.
"Appraiser" means Hulberg & Associates or such other appraiser as may
be acceptable to the Transaction Parties from time to time.
"Appurtenant Rights" means, with respect to the Land, (i) all
agreements, easements, rights of way or use, rights of ingress or egress,
privileges, appurtenances, tenements, hereditaments and other rights and
benefits, if any, at any time heretofore or hereafter granted to the Land or the
Improvements thereon, including, the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land and (ii)
all permits, licenses and rights, whether or not of record, appurtenant to the
Land.
"Asset Purchase Agreement" means that certain Asset Purchase Agreement,
dated as of December 6, 2000, among the Program Administrator, the Note
Purchaser and the Liquidity Banks.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy".
"Base Lease Term" means that portion of the Lease Term that begins
immediately after the Construction Period.
"Base Lease Term Funding Date" has the meaning specified in Section
2.2(e) of the Participation Agreement.
"Basic Rent" means the amount determined in accordance with Article IV
of the Participation Agreement and payable as such under the Participation
Agreement and the Master Lease.
"Basic Rent Payment Date" means the 12th calendar day of each month,
commencing on January 12, 2001; provided, however, that if the 12th calendar day
of any month is not a Business Day, the Basic Rent Payment Date for such month
shall be the next succeeding Business Day.
"Budget" means the project budget attached to the Construction
Contract, as approved by the Lessor Parties in their reasonable discretion.
"Business Day" means any day on which (i) commercial banks are not
authorized or required to close in San Francisco, California or New York, New
York and (ii) if such Business Day is related to a LIBOR rate, dealings in
Dollar deposits are carried out in the London interbank market.
"Capital Lease" means, as applied to any Person, any lease of property
by such Person as lessee which would be capitalized on a balance sheet for such
Person prepared in accordance with GAAP.
"Capital Lease Obligations" means the capitalized amount of all
obligations under Capital Leases.
APP-4
<PAGE>
Appendix A
"Cash Equivalents" means:
(i) Direct obligations of, or obligations the principal
and interest on which are unconditionally guaranteed by, the United
States or obligations of any agency of the United States to the extent
such obligations are backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition thereof;
(ii) Certificates of deposit maturing within one year from
the date of acquisition thereof issued by a commercial bank or trust
company organized under the laws of the United States or a state
thereof or that is a Lessor Party, provided that (a) such deposits are
denominated in Dollars, (b) such bank or trust company has capital,
surplus and undivided profits of not less than $100,000,000 and (c)
such bank or trust company has certificates of deposit or other debt
obligations rated at least A-1 (or its equivalent) by S&P or P-1 (or
its equivalent) by Moody's; and
(iii) Open market commercial paper maturing within 270 days
from the date of acquisition thereof issued by a corporation organized
under the laws of the United States or a state thereof, provided such
commercial paper is rated at least A-1 (or its equivalent) by S&P or
P-1 (or its equivalent) by Moody's.
"Casualty" means any damage or destruction of all or any portion of the
Property as a result of a fire or other casualty.
"Casualty Proceeds" means the proceeds of any awards, settlements or
payment made to the Lessor and/or the Lessee as a result of a Casualty having
occurred on the Property.
"Certifying Party" is defined in Section 21.3 of the Master Lease.
"Chief Financial Officer" means, with respect to any company or
organization, the chief financial officer, or, in case of his or her
unavailability, the treasurer, assistant treasurer or chief accounting officer
of such company or organization.
"Claims" means any and all obligations, liabilities, losses, actions,
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, reasonable legal fees and expenses) of any nature
whatsoever.
"Collateral" means the "Collateral" as defined in all of the Conveyance
Instruments and all other collateral pledged to the Agent pursuant to any other
Operative Document.
"Commercial Paper" means commercial paper issued by the Note Purchaser
to fund its purchase of the Notes and the advances to be funded thereunder.
"Commitment Fees" is defined in Section 4.8(b) of the Participation
Agreement.
"Commitment Termination Event" means
(i) the occurrence of any Lease Event of Default
described in clause (g) or (h) of Section 17.1 of the Master Lease; or
APP-5
<PAGE>
Appendix A
(ii) the occurrence and continuance of any other Lease
Event of Default and either (i) the Lessor or the Agent shall have
commenced its exercise of remedies pursuant to Section 17.3 of the
Master Lease or (ii) the Agent, acting at the direction of the
Consenting Parties, shall have given notice to the Lessee that the
Commitments have terminated; or
(iii) the Agent shall have delivered a Notice of Default to
the Lessee pursuant to the Note Purchase Agreement.
"Commitments" means (i) the commitment of the Note Purchaser and/or the
Liquidity Banks to purchase the Notes and to fund the advances to be made
thereunder pursuant to the Note Purchase Agreement or the Liquidity
Documentation, as applicable, and (ii) the commitment of the Lessor to make the
Equity Investment.
"Compliance Certificate" is defined in Section 8.1(d)(iv) of the
Participation Agreement.
"Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy, easement rights
or title to the Property or any part thereof, wholly or partially (temporarily
or permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.
"Condemnation Proceeds" shall mean the proceeds received by the Lessor
relating to a condemnation (whether partial or total) of the Property.
"Conduit Agent" means The Bank of Tokyo-Mitsubishi, Ltd., New York
Branch, and its permitted successors and assigns.
"Consenting Parties" shall have the meaning specified in Section
11.1(b) of the Participation Agreement.
"Consent to Assignment of Construction Contract" means that certain
Consent to Assignment of Construction Contract, substantially in the form of
Exhibit L to the Participation Agreement, as the same may be amended, modified
and in effect from time to time.
"Consolidated EBITDAR" means, with respect to the Guarantor, the sum of
the following, which shall be calculated for any Fiscal Quarter on a rolling
four quarter basis: (i) the Guarantor's and its Subsidiaries' consolidated Net
Income before any extraordinary items and deduction of interest expenses and
income taxes, plus (ii) depreciation and amortization expenses of the Guarantor
and its Subsidiaries accruing during such period, plus (iii) the aggregate
amount of all rentals paid during such period by the Guarantor and its
Subsidiaries under any lease (other than capital leases) plus (iv) any interest
which is capitalized for purposes of the lease transactions contemplated by the
Participation Agreement.
APP-6
<PAGE>
Appendix A
"Consolidated Fixed Charges" means, with respect to the Guarantor, the
sum of: (i) the aggregate amount of all interest and principal payments of the
Guarantor and its Subsidiaries, plus (ii) the aggregate amount of all rental
expenses of the Guarantor and its Subsidiaries, plus (iii) any interest which is
capitalized for purposes of the lease transactions contemplated by the
Participation Agreement.
"Consolidated Net Worth" means, with respect to the Guarantor, the
total stockholder's equity of the Guarantor and its Subsidiaries as reflected in
accordance with GAAP on its most recent consolidated balance sheet.
"Consolidated Tangible Net Worth" means with respect to the Guarantor,
the remainder of (i) Consolidated Net Worth of the Guarantor and its
Subsidiaries minus (ii) all intangible assets of the Guarantor and its
Subsidiaries (to the extent included in calculating Consolidated Net Worth),
including, without limitation, goodwill (including any amounts, however
designated on the balance sheet, representing the cost of acquisition of
businesses and investments in excess of underlying tangible assets), trademarks,
trademark rights, trade name rights, copyrights, patents, patent rights,
licenses, unamortized debt discount, marketing expenses, organizational
expenses, non-compete agreements and deferred research and development.
"Construction Agency Agreement" means that certain Construction Agency
Agreement, substantially in the form of Exhibit D to the Participation
Agreement, dated as of the Initial Funding Date, between the Lessor and the
Lessee, as the same may be amended, modified and in effect from time to time.
"Construction Agency Agreement Event of Default" is defined in Section
6.1 of the Construction Agency Agreement.
"Construction Agent" means Electronic Arts Redwood, Inc. in its
capacity as such under the Construction Agency Agreement.
"Construction Contract" means that certain Agreement Between Electronic
Arts Redwood, Inc., as Construction Agent and Webcor Builders, dated as of
December 5, 2000.
"Construction Period" means the period commencing as of the Initial
Funding Date and ending on the earlier to occur of (x) the Outside Completion
Date and (y) the date on which Substantial Completion is deemed to have occurred
pursuant to the Construction Agency Agreement.
"Contingent Obligation" means, as applied to the Guarantor or any
Subsidiary, any direct or indirect liability, contingent or otherwise, of the
Guarantor with respect to any Indebtedness of another Person which is not the
Guarantor or a Subsidiary of the Guarantor (the "primary obligor"), if the
purpose or intent thereof by the Guarantor is to provide assurance to the
obligee of such Indebtedness of the primary obligor that such Indebtedness will
be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such Indebtedness will be protected (in whole or in
part) against loss in respect thereof. Contingent Obligations include, without
limitation, (i) the direct or indirect guarantee, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by the Guarantor of the
Indebtedness of the primary obligor, and
APP-7
<PAGE>
Appendix A
(ii) any liability of the Guarantor for the Indebtedness of the primary obligor
through any agreement (contingent or otherwise) (a) to purchase, repurchase or
otherwise acquire such Indebtedness or any security therefor, or to provide
funds for the payment or discharge of such Indebtedness (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), (b) to
maintain the solvency or any balance sheet item, level of income or financial
condition of the primary obligor, or (c) to make take-or-pay or similar
payments, if required regardless of nonperformance by any other party or parties
to an agreement, if in the case of any agreement described under subclause (a),
(b) or (c) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the Indebtedness so guaranteed or otherwise
supported.
"Contractor" means Webcor Builders.
"Conveyance Instrument" means any deed, assignment of lease, mortgage,
deed of trust, memorandum of lease, memorandum of mortgage, UCC-1 Financing
Statement, any assignment of any of the foregoing, or any other similar
instrument purporting to create or evidence a Lien against, or convey or
otherwise transfer any interest in, the Property to any Person.
"CP Rate" means, with respect to the Note Purchaser, the all-in-cost of
funding its acquisition of the Notes and the funding of the advances thereunder
to the extent such funding is being provided by the Note Purchaser's issuance of
Commercial Paper (including discount, dealer commissions and such other amounts
as the Conduit Agent determines to be appropriate). The determination of the
Note Purchaser's CP Rate, as well as the determination of which maturities of
Commercial Paper to issue, will be made by the Conduit Agent, whose
determination shall be binding for all purposes absent manifest error; provided,
however, that the Conduit Agent shall consult with the Lessee concerning
Commercial Paper maturities. Accrued discount on the Commercial Paper maturing
between Basic Rent Payment Dates will be capitalized.
"Deed" means a grant deed with respect to the Property, in conformity
with Applicable Law and appropriate for recording with the applicable
Governmental Authorities, conveying fee simple title to the Property to the
Lessor.
"Deed of Trust" means that certain Deed of Trust, Assignment of Leases
and Rents, Security Agreement, Financing Statement and Fixture Filing,
substantially in the form of Exhibit J to the Participation Agreement, as the
same may be amended, modified and in effect from time to time.
"Documentation Date" is defined in Section 2.1 of the Participation
Agreement.
"Dollars" and "$" mean dollars in lawful currency of the United States
of America.
"Early Termination Date" is defined in Section 16.2 of the Master
Lease.
"Early Termination Notice" is defined in Section 16.1 of the Master
Lease.
APP-8
<PAGE>
Appendix A
"Eligible Account" means (i) any account maintained with a federal or
state chartered depository institution or trust company whose (x) commercial
paper, short-term debt obligations or other short-term deposits are rated at
least A-1 or P-1 by a Rating Agency if the deposits in such account are to be
held in such account for thirty (30) days or less or (y) long-term unsecured
debt obligations are rated at least AA- or A1 by each Rating Agency if the
deposits in such account are to be held in such account for more than thirty
(30) days; or (ii) a segregated trust account maintained with the trust
department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity which institution or trust company is
subject to regulations regarding fiduciary funds on deposit substantially
similar to 12 C.F.R. Section 9.10; or (iii) an account otherwise acceptable to
each Rating Agency, as confirmed in writing that such account would not, in and
of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any of the Notes.
"Eligible Assignee" means, with respect to the replacement of a
Liquidity Bank as set forth in the Participation Agreement, the commercial
financial institution proposed by the Lessee in the Replacement Notice to
replace such Liquidity Bank, which financial institution shall meet the
qualifications to become an assignee of such Liquidity Bank under the applicable
Liquidity Documentation and shall be acceptable to the Note Purchaser in its
sole discretion.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Guarantor
or any ERISA Affiliate, other than a Multiemployer Plan.
"End of Term Report" is defined in Section 13.2 of the Participation
Agreement.
"Environmental Audit" or "Environmental Report" means a written report
from an environmental consultant selected by the Lessee and approved by the
Lessor Parties, documenting that such environmental consultant has performed a
review of the environmental condition of and compliance of the Property and that
such review contains, at a minimum, site assessment information that generally
meets or exceeds applicable industry standards and practices and the most
current ASTM Standard Practice for Environmental Site Assessments: Phase One
Environmental Site Assessment.
"Environmental Claim" means any legal obligation or notice of
violation, claim, action, proceeding, demand, abatement, lien or other order or
direction (conditional or otherwise) by any Governmental Authority or any Person
relating to personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, resulting from or based upon (i) the existence
(whether currently known or unknown), or the continuation of the existence, of a
Release (including sudden or non-sudden, accidental or nonaccidental Releases)
of, or exposure to, any Hazardous Substance, odor or audible noise or other
release or emission in, into or onto the environment (including the air, ground,
water or any surface) at, in, by, from, or related to (a) the Property or (b)
the transportation, storage, treatment or disposal of materials in connection
with the operation of the Property, or (ii) the violation, or alleged violation,
of any Environmental Laws or Permits of, or from, any Governmental Authority
relating to environmental matters connected with the Property.
APP-9
<PAGE>
Appendix A
"Environmental Indemnity Agreement" means that certain Environmental
Indemnity Agreement, substantially in the form of Exhibit F to the Participation
Agreement, as the same may be amended, modified and in effect from time to time.
"Environmental Law" means all present and future Applicable Laws
relating to the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, the
Hazardous Material Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Federal Clean Water Act, as amended, the Federal
Clean Air Act as amended, the Toxic Substances Control Act as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended and the
Occupational Safety and Health Act, as amended, and any other federal, state or
local statutes, present or future, relating to health, safety, or the
environment, including, without limitation, transfer of ownership notification
statutes and the regulations promulgated pursuant thereto.
"Equity Investment" means the equity investment to be made by the
Lessor pursuant to Article III of the Participation Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" means any Person which is treated as a single
employer, trade or business (whether or not incorporated) with the Guarantor
under Section 414 of the Revenue Code.
"ERISA Reportable Event" means a reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
"ESOP" means any employee stock ownership plan of the Guarantor
currently in existence or hereafter adopted by the Guarantor.
"Event of Loss" means, with respect to the Property, any of the
following events: (i) any Casualty that renders the Property unsuitable for
continued use as property of its type immediately prior to such Casualty, (ii)
any Casualty that is so substantial in nature that restoration of the Property
to substantially its condition as existed immediately prior to such Casualty
would be impracticable or impossible, (iii) any Casualty which results in an
insurance settlement with respect to the Property on the basis of a total loss
of the Improvements; (iv) any Condemnation that involves the taking of the
applicable Lessor's entire title to the Property, (v) any Condemnation that is
such that restoration of the Property to substantially its condition as existed
immediately prior to such Condemnation would be impracticable or impossible, or
(vi) any Condemnation whereby the use or occupancy of the Property by the Lessee
thereof shall have been prohibited, directly or indirectly, for a period equal
to the lesser of (vii) ninety (90) consecutive days and (y) the remaining Lease
Term.
"Excess Remarketing Proceeds" is defined in Section 18.3(n) of the
Master Lease.
APP-10
<PAGE>
Appendix A
"Excess Sales Proceeds" means the excess, if any, of (x) the aggregate
of all proceeds received by the Lessor under the Master Lease in connection with
the sale of the Property pursuant to the Lessor's or the Agent's exercise of
remedies under Section 17.3 of the Master Lease or the Lessee's exercise of the
Remarketing Option pursuant to the Master Lease over (y) the sum of the
Outstanding Lease Balance plus all unpaid Basic Rent and Supplemental Rent
thereunder.
"Excess Unwind Proceeds" is defined in Section 17.8(c)(9) of the Master
Lease.
"Existing Land Owner" means Flatirons Funding, Limited Partnership, a
Delaware limited partnership.
"Expiration Date" is defined in Section 1.1 of the Liquidity Agreement.
"Expiration Date Extension Request" is defined in Section 15.17 of the
Participation Agreement.
"Fair Market Value" means, with respect to the Property, the amount,
which in any event shall not be less than zero, that would be paid in cash in an
arm's-length transaction between an informed and willing purchaser and an
informed and willing seller, neither of whom is under any compulsion to purchase
or sell, respectively, for the ownership of the Property. The Fair Market Value
shall be determined based on the assumption that (x) the Property is in the
condition and state of repair required under Section 9.2 of the Master Lease and
(y) the Lessee is in compliance with the other requirements of the Operative
Documents relating to the condition of the Property.
"Federal Funds Rate" means, for any day, the rate per annum set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor publication, "H.15 (519)") for such day opposite the caption "Federal
Funds (Effective)". If on any relevant day, such rate is not yet published in
H.15 (519), the rate for such day shall be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day, such rate is not yet published in
either H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day
shall be the arithmetic means, as determined by Agent, of the rates quoted to
the Agent for such day by three (3) Federal funds brokers of recognized standing
selected by the Agent.
"Federal Reserve Board" has the meaning specified in Section 7.1(e) of
the Participation Agreement.
"Final Completion" is defined in Section 1.1 of the Construction Agency
Agreement.
"Final Construction Period Funding Date" is defined in Section 2.2 of
the Participation Agreement.
"Financing Statements" means UCC Financing Statements appropriately
completed and executed for filing in each applicable jurisdiction in order to
protect the interests of each of the
APP-11
<PAGE>
Appendix A
Lessor Parties under the Operative Documents to the extent the Master Lease, the
Memorandum of Lease, the Deed of Trust, Precautionary Deed of Trust and any
other Conveyance Instruments constitute security agreements.
"Fiscal Quarter" means any fiscal quarter of the Guarantor ending on
March 31, June 30, September 30 or December 31. Subsequent changes of the fiscal
quarter of the Guarantor shall not change the term "Fiscal Quarter" as used
herein, unless the Consenting Parties shall consent in writing to such a change.
"Fiscal Year" means the fiscal year of the Guarantor ending on December
31. Subsequent changes of the fiscal year of the Guarantor shall not change the
term "Fiscal Year" as used herein, unless the Consenting Parties shall consent
in writing to such a change.
"Flatirons Lease" means that certain "synthetic lease" transaction
evidenced by that certain Amended and Restated Agreement for Lease, dated as of
March 7, 1997, by and between the Existing Land Owner and the Lessee, together
with all documents, instruments and agreements related thereto, as amended,
restated or modified and in effect from time to time.
"Funding Date" is defined in Section 2.2 of the Participation Agreement
and shall include the Initial Funding Date, each Interim Funding Date, the Final
Construction Period Funding Date and each Base Lease Term Funding Date.
"Funding Notice" is a written notice, substantially in the form of
Exhibit B-1 (with respect to the Initial Funding Date), Exhibit B-2 (with
respect to an Interim Construction Period Funding Date) or Exhibit B-3 (with
respect to the Final Construction Period Funding Date) to the Participation
Agreement to be delivered by the Lessee prior the relevant Funding Date pursuant
to Section 3.5 and Article VI of the Participation Agreement.
"GAAP" means, subject to the immediately succeeding sentence, (i) when
used in the Operative Documents with respect to the books, records and financial
statements of the Lessee or the Guarantor, whether directly or indirectly
through reference to a capitalized term used therein, (A) principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board of the United States and its predecessors, in effect
for the relevant fiscal year, and (B) to the extent consistent with such
principles, the accounting practice of the Guarantor reflected in its financial
statements for the relevant fiscal year, and (ii) when used in general, other
than as provided above, means principles that are (A) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, as in effect from time to time, and (B) consistently
applied with past financial statements of the Person adopting the same
principles. In each case provided in the preceding sentence with respect to any
financial statements, a certified public accountant would be in a position to
deliver an unqualified opinion (other than a qualification regarding changes in
generally accepted accounting principles) that "generally accepted accounting
principles" have been properly applied to such financial statements.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by,
APP-12
<PAGE>
Appendix A
any Governmental Authority, or required by any Applicable Law, including all
required environmental and operating permits and licenses, for the full use,
occupancy, zoning and operation of the Property.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Gross Remarketing Proceeds" is defined in Section 18.3(k) of the
Master Lease.
"Guaranteed Pension Plan" means any employee pension benefit plan
within the meaning of Section (3)(2) of ERISA (other than a Multiemployer Plan)
which the Guarantor, any of its Subsidiaries or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
and which is guaranteed on termination in full or in part by the PBGC pursuant
to Title IV of ERISA.
"Guarantor" means Electronic Arts, Inc., a Delaware corporation, in
such capacity under the Operative Documents, together with its permitted
successors and assigns.
"Guaranty" means that certain Guaranty, substantially in the form of
Exhibit E to the Participation Agreement, as the same may be amended, modified
and in effect from time to time.
"Hazardous Activity" means any activity, process, procedure or
undertaking that directly or indirectly (i) produces, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the Release of any Hazardous Substance into the environment (including air,
water vapor, surface water, groundwater, drinking water, land (including surface
or subsurface), plant, aquatic and animal life); (iii) involves the containment
or storage of any Hazardous Substance; or (iv) would be regulated under any
Environmental Law.
"Hazardous Condition" means any condition at the Property that violates
or threatens to violate, that results in or threatens noncompliance with, or
that creates liability under, any Environmental Law.
"Hazardous Substance" means any of the following: (i) any petroleum or
petroleum product (or additives thereto, such as, but not limited to, MTBE),
explosives, radioactive materials, asbestos, ureaformaldehyde, polychlorinated
biphenyls, lead and radon gas; (ii) any substance, material, product,
derivative, compound or mixture, mineral, chemical, waste, gas, medical waste,
or pollutant, in each case whether naturally occurring, man-made or the
by-product of any process, that is toxic or hazardous to the environment or
human health or safety, or which is now or hereafter defined or regulated as
such under any regulation under any Environmental Law; or (iii) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste or pollutant that would support the assertion of any claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law.
"Impositions" means any and all liabilities, losses, expenses and costs
of any kind whatsoever for Taxes (including, (i) real and personal property
taxes, including personal property taxes on any portion of the Property that is
classified by Governmental Authorities as personal
APP-13
<PAGE>
Appendix A
property; (ii) sales taxes, use taxes and other similar taxes (including rent
taxes and intangibles taxes); (iii) any excise taxes; (iv) conveyance taxes,
intangible taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, gross
receipts, privilege and doing business taxes, license and registration fees; and
(vi) assessments on the Property, including all assessments for public
improvements or benefits, whether or not such improvements are commenced or
completed within the Lease Term) and in each case all interest, additions to tax
and penalties thereon.
Notwithstanding anything in the first paragraph of this definition
(except as provided in the final paragraph of this definition) the term
"Impositions" shall not mean or include:
(i) Taxes that are based upon or measured by or
with respect to the gross or net income, receipts, profits, gains,
capital or net worth (including, any minimum or alternative minimum
Taxes, income or capital gains Taxes, excess profits Taxes, items of
Tax preference, or capital stock, franchise, business privilege or
doing business Taxes), or accumulated earnings Taxes or personal
holding company Taxes, including Taxes collected by withholding, if
and to the extent that such Taxes collected by withholding are not
attributable to a change in Applicable Law after the effective date
hereof (but Taxes described in this clause (i) shall not include Taxes
that are, or are in the nature of, sales, use, rental, transfer or
property Taxes), in each case imposed by any Governmental Authority in
the jurisdiction of incorporation of such Tax Indemnitee, or the
jurisdiction in which such Tax Indemnitee either maintains its
applicable lending office or is otherwise subject to tax other than as
a result of transactions contemplated by the Operative Documents, and
any interest, additions to tax, penalties or other charges in respect
of such Taxes and impositions; provided that this clause (i) shall not
be interpreted to prevent a payment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(ii) any Tax with respect to the Property to the
extent, but only to the extent, such Tax or imposition is attributable
to any act, event or omission that occurs after, or is attributable to
a period beginning after, the return of the Property to the Lessor in
accordance with the terms of the Master Lease, provided, that there
shall not be excluded from the definition of the term "Impositions"
any Taxes or impositions to the extent such Taxes or impositions are
attributable to events or circumstances occurring after the occurrence
and during the continuance of a Lease Event of Default;
(iii) any Tax for so long as, but only for so long
as, it is being contested in accordance with the provisions of Section
13.4 of the Participation Agreement provided that the foregoing shall
not limit any obligation under such Section to advance to the relevant
Tax Indemnitee amounts with respect to Taxes that are being contested
in accordance with such Section or any expenses reasonably incurred by
such Tax Indemnitee in connection with such contest;
(iv) any interest, additions to tax or penalties
imposed as a result of a breach by the Tax Indemnitee of its
obligations under the Operative Documents or as a result of the Tax
Indemnitee's failure to file any return or other documents timely and
as prescribed by applicable law; provided that this clause (iv) shall
not apply (x) if such
APP-14
<PAGE>
Appendix A
interest, additions to tax or penalties arise as a result of a position
taken (or requested to be taken) by the Guarantor or the Lessee in a
contest controlled by the Guarantor or the Lessee under Section 13.4 of
the Participation Agreement or (y) if such failure is attributable to a
failure by the Guarantor or the Lessee; provided that, the treatment by
a Governmental Authority of the arrangement created by the Operative
Documents as other than a loan secured by the Property shall not cause
any return or other document to be considered not having been filed as
prescribed by applicable law.
(v) any Taxes imposed with respect to any
voluntary (or, with respect to the Lessor, involuntary) transfer,
sale, financing or other voluntary (or, with respect to the Lessor,
involuntary) disposition by the Tax Indemnitee of any interest in the
Property or any part thereof, or any interest therein or any interest
or obligation under the Operative Documents (other than any transfer
in connection with (1) the exercise by the Lessee of its Purchase
Option or Remarketing Option under the Master Lease or any termination
option or other purchase of the Property by the Lessee, (2) the
occurrence of a Lease Event of Default, (3) a Casualty or Condemnation
affecting the Property, or (4) any sublease, modification or addition
to the Property by the Lessee);
(vi) other than with respect to the Agent and any
Liquidity Bank or the Note Purchaser, or, in each case, each of their
Affiliates and their respective successors and assigns, Taxes imposed
on or with respect to, based on, or measured by any fees received by
any Tax Indemnitee;
(vii) Taxes resulting from, or that would not have
been imposed but for, the gross negligence or willful misconduct of
such Tax Indemnitee or Affiliate thereof,
(viii) Taxes resulting from, or that would not have
been imposed but for, a breach by the Tax Indemnitee or any Affiliate
thereof of any representations, warranties or covenants set forth in
the Operative Documents (unless such breach is caused by any Lessee's
or Guarantor's breach of any of its representations, warranties or
covenants set forth in the Operative Documents);
(ix) Taxes arising out of or resulting from the
Tax Indemnitee's failure to comply with the provisions of Section 13.4
of the Participation Agreement, which failure precludes or materially
adversely affects the ability to conduct a contest pursuant to Section
13.4 of the Participation Agreement (unless such failure is caused by
the Lessee's or Guarantor's breach of any of its obligations under
such Section);
(x) Taxes that would have been imposed in the
absence of the transactions contemplated by the Operative Documents,
and Taxes arising out of, or imposed as a result of, activities of a
Tax Indemnitee or Affiliate thereof unrelated to the transactions
contemplated by the Operative Documents;
(xi) Taxes Imposed on a Tax Indemnitee arising
out of or resulting from, or that would not have been imposed but for
the existence of, any Lessor Lien attributable to such Tax Indemnitee;
APP-15
<PAGE>
Appendix A
(xii) any Tax imposed against or payable by the
Tax Indemnitee that is a direct or indirect successor, transferee, or
assignee of an original Tax Indemnitee to the extent that, based on
the Applicable Law in effect on the date of transfer or assignment,
the amount of such Tax exceeds the amount of such Tax that would have
been imposed against or payable by (or, if less, that would have been
subject to indemnification under Section 13.3 of the Participation
Agreement) such original Tax Indemnitee; provided, however, that this
exclusion shall not apply if such direct or indirect successor,
transferee or assignee acquired its interest as a result of a transfer
while a Lease Event of Default shall have occurred and is continuing;
(xiii) Taxes that would not have been imposed but
for an amendment, supplement, modification, consent or waiver to any
Operative Document (i) not initiated, requested or consented to by the
Lessee and (ii) initiated, requested or consented to by the Tax
Indemnitee unless such amendment, supplement, modification, consent or
waiver (A) arises from, or in connection with the occurrence of, a
Lease Event of Default or (B) is required by the terms of the
Operative Documents or is executed in connection with any amendment to
the Operative Documents required by law;
(xiv) Taxes in the nature of intangibles, stamp,
documentary or similar Taxes, other than stamp, transfer and other
similar taxes, fees and excises, including interest and penalties,
which are arising out of or payable in connection with the
transactions contemplated by the Participation Agreement or the other
Operative Documents;
(xv) any Tax imposed under Section 4975 of the
Revenue Code or Section 406 of ERISA other than, and subject to the
accuracy of the representations set forth in Section 7.3(a) of the
Participation Agreement, a Tax or imposition resulting from the
transactions contemplated by the Master Lease or by any other
Operative Document, in respect of the application of Section 406(a) of
ERISA and any prohibited transaction described in Section
4975(c)(1)(A)-(D) of the Revenue Code; and
(xvi) any Tax, assessment or other governmental
charge that would not have been imposed but for the failure of a
Lessor Party, upon reasonable request, to comply with any
certification, information, documentation or other reporting
requirement with which such Lessor Party is eligible to comply and
compliance with which such Lessor Party has determined is not adverse
to it in any material respect.
Notwithstanding the foregoing, the exclusions from the definition of
Impositions set forth above shall not apply (but the exclusions set forth in
clauses (iii), (iv), (vii), (viii), (x) and (xv) shall apply) to (i) any
aggregate increase in Taxes imposed on a Tax Indemnitee net of any decrease in
Taxes realized by such Tax Indemnitee, to the extent that such tax increase
would not have occurred if on the Funding Date the Tax Indemnitee had advanced
funds to the Lessee under an arrangement properly characterized for federal
income tax purposes as a loan secured by the Property acquired on such Funding
Date in an amount equal to the Outstanding Lease Balance funded on such Funding
Date, with interest for such loans equal to the Basic Rent payable on each Basic
Rent Payment Date and a principal balance at the maturity of such loans in an
amount equal to the Outstanding Lease Balance of the Master Lease outstanding at
the end
APP-16
<PAGE>
Appendix A
of the Lease Term or (ii) any aggregate net increase in Taxes attributable to
the treatment of all or a portion of the arrangement created by the Operative
Documents as a separate taxable entity (or otherwise not as a non-taxable
entity) for tax purposes.
"Improvements" means all buildings, structures, and other improvements
to be constructed on, at or under the Land in accordance with the Plans.
"Improvements Construction Costs" is defined in Section 1.1 of the
Construction Agency Agreement.
"Imputed Return" means the cost to the Lessor Parties of maintaining
their unrecovered investment after the Lease Termination Date or the expected
return to such persons, determined as (i) the average daily Outstanding Lease
Balance after the Lease Termination Date multiplied by (ii) the number of days
from and excluding the Lease Termination Date to and including the date of the
sale of the Property multiplied by (iii) the rate equal to applicable interest
rate, with respect to each of the Note Purchaser multiplied by (iv) 1/365.
"Income Tax Savings" is defined in Section 13.4(g) of the Participation
Agreement.
"Indebtedness" means, without duplication, (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services, and including, without limitation, the face amount available to be
drawn under all letters of credit, reimbursement and similar obligations with
respect to surety bonds, letters of credit and banks' acceptances, whether or
not matured, and letters of credit and other credit facilities which secure or
finance such purchase price obligations under "synthetic" leases, (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments, (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (iv)
all Capital Lease Obligations, (v) all Contingent Obligations, (vi) all
Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (vi) the amount at which any redeemable preferred
stock of such Person is required to be redeemed; provided that Indebtedness
shall not include current accounts payable arising in the ordinary course of
business.
"Indemnitees" means, collectively, the Lessor Parties and the Program
Administrator, together with their respective Affiliates, successors, assigns,
directors, shareholders, partners, members (and direct and indirect owners of
its members), officers, managers, employees and agents.
"Initial Appraisal" means that the Appraisal delivered to the Lessor
Parties prior to the initial Funding pursuant to Section 6.1(g) of the
Participation Agreement.
"Initial Funding Date" has the meaning specified in Section 2.2 of the
Participation Agreement.
APP-17
<PAGE>
Appendix A
"Insurance Requirements" means all terms and conditions of any
insurance policy required by the Construction Agency Agreement and the Master
Lease to be maintained by the Lessee thereunder.
"Interest Amount" is defined in Section 4.2(a) of to the Participation
Agreement.
"Interim Construction Period Funding Date" has the meaning specified in
Section 2.2(c) of the Participation Agreement.
"Investments" means (i) any loan or advance of funds by any Person to
any other Person (other than advances to employees of such Person for moving and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business); (ii) any purchase or other acquisition of any Stock or
Indebtedness of any other Person; and (iii) any capital contribution by such
Person to or any other investment by such Person in any other Person (including
any Contingent Obligation of such Person and any indebtedness of such Person of
the type described in clause (v) of the definition of "Indebtedness" on behalf
of any other Person); provided, however, that Investments shall not include (A)
accounts receivable or other indebtedness owed by customers of such Person which
are current assets and arose from sales of inventory in the ordinary course of
such Person's business or (B) prepaid expenses of such Person incurred and
prepaid in the ordinary course of business.
"Issuance Fee" is defined in Section 4.8(c) of the Participation
Agreement.
"KeyBank" means KeyBank National Association.
"Land" means that certain tract of land (including Appurtenant Rights
attached thereto) described in Exhibit A to the Participation Agreement.
"Land Acquisition Costs" is defined in Section 1.1 of the Construction
Agency Agreement.
"Lease Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" is defined in Section 17.1 of the Master
Lease.
"Lease Term" is defined in Section 2.3 of the Master Lease.
"Lease Termination Date" means the Maturity Date; provided, that if the
Master Lease is earlier terminated, the "Lease Termination Date" shall be such
earlier date.
"Lessee" means Electronic Arts Redwood, Inc., a Delaware corporation,
in such capacity under the Operative Documents, together with its permitted
successors and assigns.
"Lessee Parties" means collectively (i) the Lessee, (ii) the
Construction Agent, (iii) the Guarantor, (iv) any third party for which any
Person identified in clauses (i), (ii) and (iii) above has control or
supervisory authority or delegated responsibility by contract or otherwise and
(v) their respective employees, officers and agents.
APP-18
<PAGE>
Appendix A
"Lessor" means SELCO Service Corporation, an Ohio corporation doing
business in California as Ohio SELCO Service Corporation, in such capacity under
the Operative Documents, together with its permitted successors and assigns.
"Lessor Lien" means any Lien on or against the Property, lease or
sublease or disposition of title, easement, covenant, restriction or other
matter affecting title to the Property arising as a result of (i) any claim
against the Lessor not resulting from the transactions contemplated by the
Operative Documents, (ii) any act or omission of the Lessor which is not
required or expressly permitted by the Operative Documents, requested by the
Lessee or is in violation of any of the terms of the Operative Documents, (iii)
any claim against the Lessor with respect to Taxes or Transaction Expenses
against which neither the Guarantor nor the Lessee is required to indemnify the
Lessor pursuant to the Participation Agreement or the other Operative Documents
or (iv) any claim against the Lessor arising out of any transfer by the Lessor
of all or any portion of its interest in the Property or the Operative Documents
other than the transfer of title to or possession of the Property by the Lessor
pursuant to and in accordance with the Operative Documents.
"Lessor Parties" means collectively, the Transaction Parties, except
for the Lessee Parties.
"Letter of Credit" means that certain irrevocable standby letter of
credit issued by the Letter of Credit Issuer for the benefit of the Agent on
behalf of the Liquidity Banks, substantially in the form attached to the form of
Reimbursement Agreement, which shall (i) expire on or after the stated maturity
date of the Notes; (ii) be in a face amount equal to or greater than the Maximum
Lessor Risk Payment less the Aggregate Equity Investment Commitment; and (iii)
only be drawn upon if a Letter of Credit Event has occurred.
"Letter of Credit Event" means an event whereby (i) no Lease Default or
Lease Event of Default shall have occurred an be continuing, (ii) the Lessee
shall have exercised the Remarketing Option, and (iii) the Property has been
sold and the Gross Remarketing Proceeds from such sale are less than the Maximum
Lessor Risk Payment.
"Letter of Credit Issuer" means KeyBank, in such capacity under the
Operative Documents, together with its permitted successors and assigns.
"LIBOR" means, with respect to a Rent Period, the rate for deposits in
Dollars for a period comparable to such Rent Period appearing on the Telerate
Page 3750 (or any successor publication) as of 11:00 A.M. (London time) two (2)
Business Days preceding the applicable Basic Rent Payment Date; provided,
however, that if such rate is not reasonably available, then "LIBOR" shall mean
the arithmetic means of the rates, expressed in decimal, quoted to the Agent at
such time on such day by two or more major banks in the London interbank market
selected in good faith by the Agent as a rate per annum for such deposit, for
such period commencing on such first day and in such amount that the Agent
reasonably determines is representative for a single transaction on such market
on such day, is offered.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or
APP-19
<PAGE>
Appendix A
other security agreement or preferential arrangement of any kind or nature
whatsoever, including, any conditional sale or other title retention agreement,
the interest of a lessor under a Capital Lease Obligation, any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement naming the owner of the asset to which such
Lien relates as debtor.
"Liquidity Agreement" means the Liquidity Agreement, dated as of
December 6, 2000, among the Note Purchaser, Bankers Trust Company, The Bank of
Tokyo-Mitsubishi, Ltd. and the Banks (as defined therein), as the same may be
amended, modified and in effect from time to time.
"Liquidity Banks" is defined in the introductory paragraph of the
Participation Agreement.
"Liquidity Documentation" means (a) as of the Documentation Date, the
Asset Purchase Agreement and the Liquidity Agreement and (b) thereafter, shall
include any other contract, instrument or documentation pursuant to which one or
more Liquidity Banks agree, from time to time, to provide liquidity, credit,
asset purchase and/or cash collateral support to the Note Purchaser's Commercial
Paper notes issued to fund its acquisition of the Notes and the funds advanced
thereunder.
"Loans" is defined in Section 1.1 of the Liquidity Agreement.
"Marketing Period" means the period commencing on (but excluding) the
date that the Lessee delivers a Remarketing Notice pursuant to Section 18.3(a)
of the Master Lease and ending on (and including) the Lease Termination Date
with respect to the Master Lease.
"Master Lease" means that certain Master Lease and Deed of Trust,
substantially in the form of Exhibit C to the Participation Agreement, as the
same may be amended, modified and in effect from time to time.
"Material Adverse Effect" means (a) a material adverse effect on the
Property, including any Lessor Party's security interest, Liens or other rights
in the Property and the Collateral or the perfection or priority of such
security interests, Liens or rights; or (b) a change in the condition (financial
or otherwise) or business of the Guarantor which could reasonably be expected to
cause the Guarantor's Consolidated Tangible Net Worth to be reduced by 50% or
more from that reflected in the Guarantor's most recent audited financial
statements delivered to the Agent on behalf of the Lessor Parties pursuant to
Section 8.1(d) of the Participation Agreement, other than any such reduction
caused by a change in GAAP, and excluding any write-off of intangibles assets
provided that it can be reasonably expected that the impairment which relates to
the write-off of such intangible assets will be mitigated within two years.
"Material Adverse Environmental Condition" shall mean an Adverse
Environmental Condition with respect to which the Remediation Costs will exceed
five percent (5%) of the Property Cost.
APP-20
<PAGE>
Appendix A
"Material Subsidiary" means (a) the Lessee and (b) at any time during
any Fiscal Year of the Guarantor, any Subsidiary of the Guarantor whose assets
equal or exceed ten percent (10%) of the total consolidated assets of the
Guarantor at such time.
"Maturity Date" means June 6, 2006; provided, that if the Lease
Termination Date is extended pursuant to Section 18.2 of the Master Lease, the
"Maturity Date" shall be such later date.
"Maximum Lessor Risk Payment" means $11,206,037.11 which constitutes
8.62% of the Aggregate Commitment Amount.
"Maximum Recourse Amount" means $118,793,962.89 which constitutes
91.38% of the Aggregate Commitment Amount.
"Maximum Unwind Amount" means, at any particular date, an amount equal
to (i) 100% of the Property Cost at such date for the acquisition of the Land
and related expenses, plus (ii) 89.9% of the Property Cost at date for the
construction of the Improvements and related expenses, capitalized in accordance
with GAAP, minus (iii) the accreted value of cash payments made by the Lessee
during the Construction Period.
"Memorandum of Lease" means that certain Memorandum of Lease,
substantially in the form of Exhibit G to the Participation Agreement, as the
same may be amended, modified and in effect from time to time.
"Modifications" is defined in Section 10.2(a) of the Master Lease.
"Moody's" means Moody's Investors Service, Inc. or any successor agency
thereto.
"Multi-Employer Plan" means any multi-employer plan within the meaning
of Section 3(37) of ERISA maintained or contributed to by the Guarantor or any
ERISA Affiliate.
"Net Income (Loss)" means, in respect of any fiscal period, the net
income (or net loss, as the case may be) of the Guarantor and its Subsidiaries
for such period, after deduction of all expenses, taxes and other proper charges
determined on a consolidated basis in accordance with GAAP, after eliminating
therefrom all extraordinary nonrecurring items of income.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as
of December 6, 2000, among the Lessor, the Lessee, the Guarantor and the Note
Purchaser, as the same may be amended, modified and in effect from time to time.
"Note Purchaser" means Victory Receivables Corporation, a Delaware
corporation, in such capacity under the Operative Documents, together with its
permitted successors and assigns.
"Notes" means the notes to be issued by Lessor pursuant to the Note
Purchase Agreement and Section 3.1 of the Participation Agreement.
"Notice of Default" is defined in the Note Purchase Agreement.
APP-21
<PAGE>
Appendix A
"Obligations" means all obligations (monetary or otherwise, whether
absolute or contingent, matured or unmatured, direct or indirect, choate or
inchoate, sole, joint, several or joint and several, due or to become due,
heretofore or hereafter contracted or acquired) of the Lessee arising under or
in connection with the Operative Documents including (i) all obligations for
Basic Rent, Outstanding Lease Balance, Maximum Recourse Amount and Purchase
Option Price, whether incurred on the Documentation Date or thereafter, (ii) all
obligations for Supplemental Rent and all other obligations and liabilities of
the Lessee, whether incurred on the Documentation Date or thereafter, whether
for fees, costs, indemnification or otherwise, arising under any Operative
Document, (iii) all out-of-pocket costs and expenses, including reasonable
attorneys' fees and legal expenses, incurred by any Lessor Party to the extent
set forth in the Operative Documents in connection with such indebtedness,
obligations and liabilities, including, without limitation, all Transaction
Expenses, and (iv) following the occurrence and during the continuance of a
Lease Event of Default, all advances made by any Lessor Party for the
maintenance, protection, preservation or enforcement of, or realization upon,
the collateral in which any Lessor Party, or all of them, have been granted a
security interest pursuant to an Operative Document (or any portion thereof)
including advances for storage, transportation charges, taxes, insurance,
repairs and the like.
"Operative Documents" means the following:
(i) the Participation Agreement;
(ii) the Master Lease;
(iii) the Guaranty;
(iv) the Memorandum of Lease;
(v) the Precautionary Deed of Trust;
(vi) the Deed of Trust;
(vii) the Deed;
(vii) each Financing Statement;
(ix) each Precautionary Financing Statement;
(x) each Conveyance Instrument;
(xi) each document or instrument constituting part of the
Liquidity Documentation;
(xii) the Note Purchase Agreement;
(xiii) the Environmental Indemnity Agreement;
(xiv) the Construction Agency Agreement;
(xv) the Administration Agreement;
(xvi) the Proposal (but only as it relates to the payment
of the Structuring Fee and the Upfront Fee payable to KeyBank);
(xvii) the Notes;
(xviii) the Reimbursement Agreement;
(xix) the Letter of Credit; and
(xx) any other document that the Lessee, the Lessor and
the Note Purchaser agree in writing to designate as an "Operative
Document".
"Other Taxes" is defined in Section 4.6 of the Participation Agreement.
APP-22
<PAGE>
Appendix A
"Outside Completion Date" means the date which is no later than
eighteen (18) months after the Initial Funding Date.
"Outstanding Lease Balance" means, as of any date of determination, (i)
the aggregate outstanding principal amount of the Notes plus the aggregate
amount of made but unredeemed Equity Investment.
"Overall Transaction" means all the transactions and activities
referred to in or contemplated by the Operative Documents.
"Overdue Rate" is defined in the Note Purchase Agreement and the
respective Notes.
"Participation Agreement" means the Participation Agreement, dated as
of December 6, 2000, by and among the Lessee, the Guarantor, the Lessor, the
Note Purchaser, the Conduit Agent, the Liquidity Banks, the Letter of Credit
Issuer and the Agent, as the same may be amended, modified and in effect from
time to time.
"PBGC" means the Pension Benefit Guaranty Corporation created by
Section 4002 of ERISA and any successor entity or entities having similar
responsibilities.
"Percentage" is defined in Section 1(a) of the Asset Purchase
Agreement.
"Percentage Interest" is defined in the fifth introductory paragraph of
the Asset Purchase Agreement.
"Permit" means any permit, approval, consent, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Businesses" means businesses substantially the same as the
primary businesses conducted by the Guarantor and its Subsidiaries as of the
date hereof.
"Permitted Exceptions" means (i) Liens of the types described in
clauses (i), (ii), (iii), (v), (vii), (viii) and (ix) of the definition of
Permitted Liens and (ii) Liens described on the title insurance policy delivered
pursuant to Section 6.1(p) of the Participation Agreement that have been
consented to by the Lessor Parties in their reasonable discretion.
"Permitted Liens" means any of the following:
(i) the respective rights and interests of the parties under the
Operative Documents as provided in the Operative Documents (including, any Lien
created pursuant to or contemplated by the terms of the Operative Documents);
(ii) Liens for Taxes that either are not yet delinquent or are
being contested in accordance with the provisions of Section 13.4(b) of the
Participation Agreement;
(iii) the rights of any sublessee under a sublease permitted by the
terms of the Master Lease;
APP-23
<PAGE>
Appendix A
(iv) Liens arising by operation of law, materialmen's, mechanics',
workers', repairmen's, employees', carriers', warehousemen's and other like
Liens relating to the construction of the Improvements or in connection with any
Modifications or arising in the ordinary course of business for amounts that are
not more than sixty (60) days past due or are being diligently contested in good
faith by appropriate proceedings, so long as such proceedings satisfy the
conditions for contest proceedings set forth in Section 12.1 of the Master
Lease;
(v) Liens of any of the types referred to in clause (iv) above
that have been bonded for not less than the full amount in dispute (or as to
which title insurance reasonably satisfactory to the Lessor and the other Lessor
Parties has been provided or other security arrangements reasonably satisfactory
to the Lessor and the Note Purchaser have been made), which bonding (or
arrangements) shall comply with applicable Requirements of Law, and has
effectively stayed any execution or enforcement of such Liens;
(vi) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith and
for the payment of which adequate reserves have been provided as required by
GAAP or other appropriate provisions have been made, so long as such Liens are
subordinate to the Liens of the Deed of Trust and such proceedings have the
effect of staying the execution of such judgments or awards and satisfy the
conditions for the continuation of proceedings to contest set forth in Section
12.1 of the Master Lease;
(vii) zoning restrictions, easements, rights of way and other
encumbrances on title to real property permitted pursuant to Section 11.2 of the
Master Lease;
(viii) Lessor Liens;
(ix) Liens created by the Lessee with the consent of the Agent on
behalf of the Lessor and the Note Purchaser, or otherwise permitted in the
Operative Documents;
(x) Liens described on the title insurance policy delivered with
respect to the Property pursuant to Section 6.1(p) of the Participation
Agreement that have been consented to by the Lessor Parties in their reasonable
discretion.
(xi) Liens securing the Lessee's obligations under the Flatirons
Lease; and
(xii) Other Liens on the property of Guarantor and its Subsidiaries
securing Indebtedness otherwise permitted pursuant to Section 8.2(a) of the
Participation Agreement;
provided, however, that, with respect to the Property, the foregoing shall not
be construed to permit any Lien, except for Permitted Exceptions, on the
Property or any component thereof.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including, any
instrumentality, division, agency, body or department thereof).
"Plans" is defined in Section 1.1 of the Construction Agency Agreement.
APP-24
<PAGE>
Appendix A
"Pledged Property" is defined in Section 14.8(a) of the Participation
Agreement.
"Precautionary Deed of Trust" means that certain Precautionary Deed of
Trust, Assignment of Leases and Rents, Security Agreement, Financing Statement
and Fixture Filing, substantially in the form of Exhibit H to the Participation
Agreement, as the same may be amended, modified and in effect from time to time.
"Precautionary Financing Statements" means UCC financing statements
appropriately completed and executed for filing in each applicable jurisdiction
naming the Lessor as the secured party and the Lessee as the debtor in order to
protect the interests of each of the Lessor Parties under the Operative
Documents to the extent that Article XV of the Master Lease constitutes a
security agreement.
"Prepayment" has the meaning specified in Section 4.2(e) of the
Participation Agreement.
"Prepayment Account" has the meaning specified in Section 4.2(e) of the
Participation Agreement.
"Prime Rate" means the per annum rate publicly announced by KeyBank
from time to time at its office in Cleveland, Ohio. The Prime Rate is determined
by KeyBank from time to time as a means of pricing credit extensions to some
customers and is neither directly tied to any external rate of interest or index
nor necessarily the lowest rate of interest charged by KeyBank at any given time
for any particular class of customers or credit extensions. Any change in the
Prime Rate resulting from a change in the Prime Rate shall become effective on
the Business Day on which each change in the Prime Rate occurs.
"Program Administrator" means, collectively, Banker's Trust Company,
and each of its agents, subagents and successors and assigns.
"Property" means the property subject from time to time to the Master
Lease, and includes the interest in the Land held by the Lessor with respect to
such property and all buildings, structures, fixtures and other improvements of
every kind existing at any time and from time to time on or under the Land
(including the Improvements), together with any and all appurtenances to such
buildings, structures or improvements, including sidewalks, utility pipes,
conduits and lines, parking areas and roadways located on or under the Land, and
including all Modifications and other additions to or changes in the
Improvements at any time, and the equipment, parts and supplies related to the
Property (as described on the Memorandum of Lease, Precautionary Deed of Trust
or Deed of Trust, as the case may be).
"Proposal" means that certain proposal dated as of September 21, 2000,
from the Structuring Agent to the Guarantor outlining the terms and conditions
of the Overall Transaction.
"Purchase Notice" means a written notice by the Lessee delivered to the
Lessor pursuant to Section 18.1 of the Master Lease, notifying the Lessor of the
Lessee's intention to exercise its Purchase Option pursuant to such Section,
which notice shall identify the proposed date of such purchase.
APP-25
<PAGE>
Appendix A
"Purchase Option" is defined in Section 18.1 of the Master Lease.
"Purchase Option Price" is defined in Section 18.1 of the Master Lease.
"Purchase Termination Date" is defined in the Note Purchase Agreement.
"Rating Agencies" means S&P and Moody's.
"Redwood Shores Documents" means, collectively, The Shores Business
Center Declaration of Covenants, Conditions, Restrictions & Charges for
Commercial Development by Redwood Shores, Inc., a California corporation dated
January 8, 1981 and recorded on February 6, 1981 as Instrument No. 12350-AS;
Development Agreement between City of Redwood City and Redwood Shores, Inc., a
California corporation dated June 16, 1982 and recorded on July 8, 1982 as
Instrument No. 82057195; Median Landscaping Agreement by and between City of
Redwood City, Redwood Shores, Inc., a California corporation and Shores Business
Center Association, a California corporation dated August 23, 1982 and recorded
on September 20, 1982 as Instrument No. 82080558; Covenants Agreement by and
between Redwood Shores Properties, a California joint venture partnership and
Flatirons Funding, Limited Partnership, a Delaware limited partnership dated
February 14, 1995 and recorded on February 15, 1995 as Instrument No. 95015506;
License and Improvement Agreement Containing Terms Covenants and Conditions
between Flatirons Funding, Limited Partnership, a Delaware limited partnership
and Redwood Shores, Inc., a California corporation dated February 14, 1995 and
recorded on February 15, 1995 as Instrument No. 95015507; Memorandum of Option
Agreement between Redwood Shores Properties, a California joint venture general
partnership and Flatirons Funding, Limited Partnership, a Delaware limited
partnership dated February 14, 1995 and recorded on February 15, 1995 as
Instrument No. 95015508; Development Agreement between Flatirons Funding,
Limited Partnership, a Delaware limited partnership and The City of Redwood City
dated November 7, 1996 and recorded on November 8, 1996 as Instrument No.
96138988; Restrictive Covenant Agreement between Shores Business Center
Association, a California non-profit mutual benefit corporation and Flatirons
Funding, Limited Partnership, a Delaware limited partnership dated March 27,
1997 and recorded on March 27, 1997 as Instrument No. 97034609; Covenants,
Condition and Restrictions for Electronic Arts Business Park by Flatirons
Funding, Limited Partnership, a Delaware limited partnership dated September 3,
1998 and recorded on September 18, 1998; Assumption and Covenants Agreement by
and between Flatirons Funding, Limited Partnership and SELCO Service Corporation
dated December 6, 2000; Assignment of Sewage Treatment Capacity by and between
Flatirons Funding, Limited Partnership and SELCO Service Corporation, an Ohio
corporation dated December 6, 2000; Assignment and Assumption of Development
Agreement and Permits by and between Flatirons Funding, Limited Partnership and
SELCO Service Corporation, an Ohio corporation dated December 6, 2000; and the
Grant Deed by Flatirons Funding, Limited Partnership, a Delaware limited
partnership dated December 6, 2000, as such documents may be amended, modified
and in effect from time to time.
"Reimbursement Agreement" means that certain Reimbursement Agreement
for Irrevocable Standby Letter of Credit, substantially in the form of Exhibit O
to the Participation Agreement, to be entered into between the Lessor and the
Letter of Credit Issuer, as the same may be amended, modified and in effect from
time to time.
APP-26
<PAGE>
Appendix A
"Related Security" means all collateral rights granted to the Note
Purchaser to secure repayment of the Notes.
"Release" means, the presence (whether currently known or unknown) of
Hazardous Substances or any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Hazardous Substances through or in the air, soil, surface water,
ground water or property and/or the threat thereof.
"Remarketing Notice" is defined in Section 18.3(a) of the Master Lease.
"Remarketing Option" is defined in Section 18.3 of the Master Lease.
"Remedial Action" means all actions, including corrective actions,
equipment upgrades or relocation, or building demolition, repair or
reconstruction necessary or appropriate to (i) investigate, clean up, remove,
treat or in any other way address any Hazardous Substances or other substance in
the indoor or outdoor environment, (ii) prevent the Release or threat of Release
or minimize the further Release of any Hazardous Substances or other substance
so it does not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (iii) perform pre-remedial
studies and investigations, remedial designs and actions and post-remedial
monitoring and care including, without limitation, any such actions performed
pursuant to any voluntary cleanup program or similar program administered by any
Governmental Authority for the purposes of addressing any Hazardous Conditions.
"Remediation Costs" means all costs and expenses associated with
Remedial Action.
"Renewal Notice" is defined in Section 18.2(b) of the Master Lease.
"Renewal Option" is defined in Section 18.2(a) of the Master Lease.
"Renewal Period" is defined in Section 18.2(a) of the Master Lease.
"Rent" means, collectively, the Basic Rent and the Supplemental Rent,
in each case payable under the Master Lease.
"Rent Period" means, initially, the period commencing on the Initial
Funding Date and ending as of (but excluding) the first Basic Rent Payment Date,
and thereafter, the period beginning on each Basic Rent Payment Date and ending
as of (but excluding) the following Basic Rent Payment Date.
"Replacement Notice" is defined in Section 4.7 of the Participation
Agreement.
"Requesting Party" is defined in Section 21.3 of the Master Lease.
"Required Builder's Risk Insurance" means the builder's risk policy
coverage to be provided by the Contractor pursuant to the Construction Contract,
as approved by the Agent in its reasonable discretion.
APP-27
<PAGE>
Appendix A
"Required Modification" is defined in Section 10.2(a)(i) of the Master
Lease.
"Requirement of Law" means, as to any Person, the Organic Documents or
other organizational or governing documents of such Person, and all federal,
state and local laws, rules, regulations, orders, decrees or other
determinations of an arbitrator, court or other Governmental Authority
including, all disclosure requirements of ERISA and the requirements of
Environmental Laws, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is subject.
"Responsible Officer" means, with respect to any Person, any of the
executive officers of such Person.
"Responsible Officer's Certificate" means a certificate to be delivered
by a Responsible Officer pursuant to the Participation Agreement.
"Return Conditions" is defined in Section 18.3 of the Master Lease.
"Revenue Code" means the Internal Revenue Code of 1986, as the same may
be amended from time to time, and any successor statute or statutes, and any
regulations promulgated thereunder.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies Inc., or any successor agency thereto.
"Secured Obligations" means all amounts due and payable from time to
time pursuant to the Notes.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"Security Deposit" is defined in Section 3.4 of the Master Lease.
"Shortfall Amount" with respect to the Master Lease as of the Lease
Termination Date, the amount of the Outstanding Lease Balance remaining after
the completion of a sale (if any) of the Property subject thereto pursuant to
Article XVIII of the Master Lease and the payment by the Lessee of the Maximum
Recourse Amount under Section 18.3(k) of the Master Lease.
"Solvent" shall mean, with respect to any Person on any date, that on
such date (i) the fair value of the property of such Person is greater than the
fair value of the liabilities (including, without limitation, contingent
liabilities) of such Person, (ii) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (iv) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
APP-28
<PAGE>
Appendix A
"Stock" means all shares, options, interests, participations or other
equivalents (regardless of how designated) of or in a corporation or equivalent
entity (including, a partnership, business trust or limited liability company),
whether voting or nonvoting, and including, without limitation, common stock,
preferred stock, beneficial interests in trusts, securities convertible into or
exchangeable for stock, or warrants or options for any of the foregoing.
"Structuring Agent" means Key Global Finance, together with its
permitted successors and assigns.
"Structuring Fee" is defined in Section 4.8(d) of the Participation
Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity (including business trusts) of which an
aggregate of more than 50% of the outstanding Stock, having ordinary voting
power to elect or appoint a majority of the members of the board of directors,
trustees or members of a similar governing body of such corporation, partnership
or other entity (irrespective of whether, at the time, Stock of any other class
or classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency), is, or of
which an aggregate of more than 50% of the interests in which are, at the time,
directly or indirectly, owned by such Person and/or one or more Subsidiaries of
such Person.
"Substantial Completion" is defined in Section 1.1 of the Construction
Agency Agreement.
"Subtenant" means any sublessee of the Property, or any part thereof,
under a sublease described in Article VI of the Master Lease.
"Supplemental Rent" means the amount determined in accordance with
Article III of the Master Lease and payable as such under the Participation
Agreement and the Master Lease.
"Support Amount" has the meaning specified in Section 4.2(c) of the
Participation Agreement.
"Tax Indemnitees" means, collectively, the Lessor Parties, in each
case, each of their officers, employees, directors, agents and Affiliates and
respective successors and assigns.
"Taxes" is defined in Section 4.6 of the Participation Agreement.
"Title Company" means First American Title Insurance Company.
"Total Consolidated Capital" means, with respect to Guarantor and its
Subsidiaries, the sum of (i) Consolidated Net Worth plus (ii) Total Consolidated
Debt.
"Total Consolidated Debt" means, with respect to Guarantor, all of
Guarantor's and its Subsidiaries' (i) borrowed funds, (ii) conditional sale
agreements, (iii) synthetic leases and other off-balance sheet financing, (iv)
bonds, debentures, notes or similar instruments, (v) capital lease obligations,
(vi) outstanding letters of credit, (vii) indebtedness or guarantees of the
indebtedness
APP-29
<PAGE>
Appendix A
of others, (viii) acceptance facilities and (ix) any other obligations in which
interest charges are customarily paid by Guarantor and its Subsidiaries.
"Transaction Expenses" means all costs and expenses incurred in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents
including:
(i) the reasonable fees, out-of-pocket expenses
and disbursements of counsel for each of the Lessor Parties in
negotiating the terms of the Operative Documents and the other
transaction documents, preparing for the closing under, and rendering
opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of
the types involved in the transactions contemplated by the Operative
Documents;
(ii) the reasonable fees, out-of-pocket expenses
and disbursements of counsel for each of the Lessor Parties in
connection with (1) any amendment, supplement, waiver or consent with
respect to any Operative Documents, (2) any enforcement of any rights
or remedies against the Guarantor or the Lessee in respect of the
Operative Documents and (3) the purchase of the Property by the Lessee
or any other Person pursuant to Articles XVI, XVII, XVIII or XIX of
the Master Lease;
(iii) the reasonable fees, out-of-pocket expenses
and disbursements of counsel for each of the Lessor Parties in
connection with (1) the transactions contemplated to occur on the
Funding Dates, (2) any amendment, supplement, waiver or consent with
respect to any Operative Documents, (3) any enforcement of any rights
or remedies against the Guarantor or the Lessee in respect of the
Operative Documents and (4) any purchase of the Property by the Lessee
or any other Person pursuant to Articles XVI, XVII, XVIII or XIX of
the Master Lease;
(iv) any and all Taxes and fees incurred in
recording, registering or filing any Operative Document, any other
transaction document, any deed, assignment of ground lease,
declaration, mortgage, security agreement, notice or financing
statement with any public office, registry or governmental agency in
connection with the transactions contemplated by the Operative
Documents;
(v) all title fees, premiums, escrow costs and
other expenses relating to title insurance and the closings
contemplated by the Operative Documents;
(vi) all fees, expenses and disbursements of each
local counsel retained in connection with the transactions
contemplated by the Operative Documents;
(vii) all costs and expenses relating to surveys
and Environmental Audits for the Property;
(viii) fees and other expenses relating to
Appraisals; and
(ix) all incentive fees, purchase prices or other
costs paid by the Lessor in connection with the transactions
contemplated by the Operative Documents.
APP-30
<PAGE>
Appendix A
"Transaction Parties" means, collectively, the parties to the
Participation Agreement.
"UCC Financing Statements" shall mean Form UCC-1, each in the form
required in each jurisdiction in which such UCC Financing Statements are
required to be filed.
"Unmatured Acceleration Event" is defined in the Note Purchase
Agreement.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as
in effect in any applicable jurisdiction.
"United States" means the United States of America.
"Unwind Event" is defined in Section 6.3 of the Construction Agency
Agreement.
"Unwind Marketing Period" is defined in Section 17.8(c)(2) of the
Master Lease
"Unwind Option" is defined in Section 17.8(a) of the Master Lease.
"Unwind Proceeds" is defined in Section 17.8(c)(9) of the Master Lease.
"Upfront Fees" is defined in Section 4.8(a) of the Participation
Agreement.
"Yield Amount" is defined in Section 4.2(b) of the Participation
Agreement.
APP-31