EXHIBIT 10.25
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SECOND AMENDED AND RESTATED
PARTICIPATION AGREEMENT
dated as of February 21, 2001
among
ASYST TECHNOLOGIES, INC.
as Lessee,
LEASE PLAN NORTH AMERICA, INC.,
as Lessor and as a Participant,
ABN AMRO BANK N.V.,
as a Participant,
THE OTHER BANKS AND FINANCIAL INSTITUTIONS PARTY HERETO,
as Participants
and
ABN AMRO BANK N.V.
as Agent
Fremont, California Facilities
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TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS; INTERPRETATION............................................................................. 2
SECTION 2 CLOSING DATE............................................................................................ 2
SECTION 3 ACQUISITION OF THE PROPERTY; FUNDING OF ADVANCES........................................................ 2
Section 3.1 Lessor Commitment; Lessee Covenants........................................................... 2
Section 3.2 Participants' Commitments..................................................................... 3
Section 3.3 Procedures for Acquisition of the Land Interest............................................... 3
Section 3.4 Procedures for Advances....................................................................... 4
Section 3.5 Allocation of Commitments..................................................................... 4
Section 3.6 Termination, Reduction, Extension or Increase of Participants' Commitment..................... 5
Section 3.7 Interest Rates, Yield and Payment Dates....................................................... 7
Section 3.8 Computation of Interest and Yield............................................................. 9
Section 3.9 Pro Rata Treatment and Payments............................................................... 10
Section 3.10 The Account................................................................................... 11
Section 3.11 Basic Rent.................................................................................... 11
Section 3.12 Purchase Payments by Lessee................................................................... 11
Section 3.13 Residual Value Guarantee Amount Payment by Lessee............................................. 13
Section 3.14 Sales Proceeds of Property.................................................................... 14
Section 3.15 Supplemental Rent............................................................................. 17
Section 3.16 Excepted Payments............................................................................. 17
Section 3.17 Distribution of Payments After Event of Default............................................... 17
Section 3.18 Other Payments................................................................................ 18
Section 3.19 Casualty and Condemnation Amounts............................................................. 18
Section 3.20 Order of Application.......................................................................... 18
SECTION 4 FEES.................................................................................................... 19
Section 4.1 Commitment Fees............................................................................... 19
Section 4.2 Arrangement Fee; Other Fees................................................................... 19
Section 4.3 Administration Fee............................................................................ 19
Section 4.4 Overdue Fees.................................................................................. 19
SECTION 5 CERTAIN INTENTIONS OF THE PARTIES....................................................................... 20
Section 5.1 Nature of Transaction......................................................................... 20
Section 5.2 Amounts Due Under Lease....................................................................... 20
SECTION 6 CONDITIONS PRECEDENT TO CLOSING DATE AND ADVANCES....................................................... 21
Section 6.1 Conditions Precedent - Land Interest.......................................................... 21
Section 6.2 Conditions Precedent - Improvements........................................................... 25
Section 6.3 Further Conditions Precedent.................................................................. 28
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SECTION 7 COMPLETION DATE CONDITIONS.............................................................................. 29
Section 7.1 Conditions to Completion Date................................................................. 29
SECTION 8 REPRESENTATIONS......................................................................................... 31
Section 8.1 Representations of the Lessor................................................................. 31
Section 8.2 Representations of the Participants........................................................... 32
Section 8.3 Representations of the Lessee................................................................. 34
Section 8.4 Representations of the Lessee With Respect to the Property.................................... 39
Section 8.5 Representations of the Lessee With Respect to Each Advance.................................... 42
SECTION 9 PAYMENT OF CERTAIN EXPENSES............................................................................. 43
Section 9.1 Transaction Expenses.......................................................................... 43
Section 9.2 Brokers' Fees and Stamp Taxes................................................................. 44
Section 9.3 Obligations.................................................................................... 44
SECTION 10 OTHER COVENANTS AND AGREEMENTS.......................................................................... 45
Section 10.1 Covenants of the Lessee........................................................................ 45
Section 10.2 The Lessee's Financial Covenants............................................................... 57
Section 10.3 Cooperation with the Lessee.................................................................... 58
Section 10.4 Covenants of the Lessor........................................................................ 59
SECTION 11 AMENDMENTS; ACTIONS ON DEFAULT; RELATIONSHIP OF LESSOR AND PARTICIPANTS................................ 59
Section 11.1 Amendments..................................................................................... 59
Section 11.2 Forbearance, Execution of Waivers and Amendments by the Lessor; Actions on Default............. 61
Section 11.3 Actions by Lessor Generally.................................................................... 62
Section 11.4 Conflicts...................................................................................... 63
Section 11.5 Refusal to Give Consents or Fund............................................................... 63
Section 11.6 Required Repayments............................................................................ 64
Section 11.7 Indemnification................................................................................ 64
Section 11.8 Application of Payments Received From Defaulting Participant As a Cure For Payment Defaults.... 65
Section 11.9 Order of Application........................................................................... 65
Section 11.10 Investments Pending Dispute Resolution; Overnight Investments.................................. 65
Section 11.11 Agent to Exercise Lessor's Rights.............................................................. 66
Section 11.12 Exculpatory Provisions Regarding the Lessor.................................................... 66
SECTION 12 TRANSFERS OF PARTICIPANTS' INTERESTS.................................................................... 66
Section 12.1 Restrictions on and Effect of Transfer by Participants......................................... 66
Section 12.2 Covenants and Agreements of Participants....................................................... 68
Section 12.3 Future Participants............................................................................ 69
SECTION 13 INDEMNIFICATION......................................................................................... 69
Section 13.1 General Indemnification........................................................................ 69
Section 13.2 End of Term Indemnity.......................................................................... 72
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Section 13.3 Environmental Indemnity....................................................... 73
Section 13.4 Proceedings in Respect of Claims.............................................. 74
Section 13.5 General Impositions Indemnity................................................. 75
Section 13.6 Funding Losses................................................................ 79
Section 13.7 Regulation D Compensation..................................................... 80
Section 13.8 Basis for Determining Interest Rate Inadequate or Unfair...................... 80
Section 13.9 Illegality.................................................................... 81
Section 13.10 Increased Cost and Reduced Return............................................. 81
Section 13.11 Substitution of Participant................................................... 83
Section 13.12 Indemnity Payments in Addition to Residual Value Guarantee Amount............. 83
Section 13.13 Limitations on Indemnification................................................ 83
Section 13.14 Lessor Indemnification........................................................ 83
SECTION 14 THE AGENT.............................................................................. 85
Section 14.1 Appointment................................................................... 85
Section 14.2 Delegation of Duties.......................................................... 85
Section 14.3 Exculpatory Provisions........................................................ 85
Section 14.4 Reliance by Agent............................................................. 86
Section 14.5 Notice of Default............................................................. 86
Section 14.6 Non-Reliance on Agent and Other Participants.................................. 86
Section 14.7 Indemnification............................................................... 87
Section 14.8 Agent in its Individual Capacity.............................................. 87
Section 14.9 Successor Agent............................................................... 87
SECTION 15 MISCELLANEOUS.......................................................................... 88
Section 15.1 Survival of Agreements........................................................ 88
Section 15.2 No Broker, etc................................................................ 88
Section 15.3 Notices....................................................................... 88
Section 15.4 Counterparts.................................................................. 89
Section 15.5 Headings, etc................................................................. 89
Section 15.6 Parties in Interest........................................................... 89
Section 15.7 GOVERNING LAW................................................................. 89
Section 15.8 Severability.................................................................. 89
Section 15.9 Liability Limited............................................................. 89
Section 15.10 Further Assurances............................................................ 90
Section 15.11 Submission to Jurisdiction.................................................... 90
Section 15.12 Confidentiality............................................................... 90
Section 15.13 WAIVER OF JURY TRIAL.......................................................... 91
Section 15.14 Amendment and Restatement..................................................... 91
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SCHEDULES
SCHEDULE I Participants' Commitments
SCHEDULE II Notice Information and Funding Offices
SCHEDULE III Subsidiaries
SCHEDULE IV Pricing Grid
SCHEDULE 10.1(b)(i) Existing Indebtedness
SCHEDULE 10.1(b)(iv)(D) Existing Investments
SCHEDULE 10.1(b)(iv)(E) Investment Policy
SCHEDULE 10.2(e) Required Cash Balance Amount
APPENDICES
APPENDIX 1 Definitions and Interpretation
EXHIBITS
EXHIBIT A Form of Acquisition Request
EXHIBIT B Form of Funding Request
EXHIBIT C Cash Collateral Request
EXHIBIT D Form of Environmental Certificate
EXHIBIT E Form of Compliance Certificate
EXHIBIT F Opinion of Counsel to Lessee
EXHIBIT G Form of Architect's Completion Certificate
EXHIBIT H Form of Lessee's Completion Certificate
EXHIBIT I Form of Assignment and Acceptance
EXHIBIT J Form of Participant's Letter
EXHIBIT K Assignment of Lease and Consent to Assignment
EXHIBIT L Cash Collateral Agreement
EXHIBIT M Construction Agency Agreement
EXHIBIT N Construction Agency Agreement Assignment
EXHIBIT O Form of Mortgage
EXHIBIT P Form of Minimum Cash Balance Collateral Agreement
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SECOND AMENDED AND RESTATED PARTICIPATION AGREEMENT
THIS SECOND AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of
February 21, 2001 (this "Participation Agreement" or this "Agreement"), is
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entered into by and among ASYST TECHNOLOGIES, INC., a California corporation, as
Lessee (together with its permitted successors and assigns, the "Lessee"); LEASE
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PLAN NORTH AMERICA, INC., an Illinois corporation, as Lessor (together with its
permitted successors and assigns in such capacity, the "Lessor") and as a
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Participant, ABN AMRO BANK N.V., and each of the other banks or financial
institutions listed on the signature pages hereto, as Participants (together
with the Lessor in its capacity as a Participant and their permitted successors
and assigns, each a "Participant" and collectively the "Participants"); and ABN
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AMRO BANK N.V., as Agent (in such capacity, together with its successors in such
capacity, the "Agent") for the Participants.
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WHEREAS, the Lessee, the Lessor, as Lessor and as a Participant, the
Participants party thereto and the Agent are parties to that certain Amended and
Restated Participation Agreement entered into as of November 16, 2000 (the
"Existing Participation Agreement") which Existing Participation Agreement
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amended and restated that certain Participation Agreement dated as of June 30,
2000 among the Lessee, the Lessor, as Lessor and as a Participant, the
Participants party thereto and the Agent (the "Original Participation
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Agreement"); the Existing Participation Agreement as amended and restated by
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this Amended and Restated Participation Agreement shall hereinafter be referred
to as the "Participation Agreement"; and
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WHEREAS, the parties thereto desire to amend and restate the Existing
Participation Agreement to modify and amend certain provisions thereof on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants herein and such other good and valuable consideration, the receipt and
sufficiency of which are acknowledged hereby, the parties hereto hereby agree to
amend and restate the Existing Participation Agreement so that it shall read in
its entirety as follows:
PRELIMINARY STATEMENT
In accordance with the terms of this Participation Agreement, the Lease and
the other Operative Documents,
A. the Lessor contemplates acquiring a fee simple interest in a
certain parcel of land by acquiring such land, as purchaser, from the
Existing Owner;
B. using Advances from the Lessor, following the Improvements
Closing Date, the Lessee contemplates that it will build, as Construction
Agent, certain Improvements on such parcel of land consisting of four
buildings totaling approximately 340,000 square feet to be used by the
Lessee as Lessee's corporate headquarters and manufacturing facilities, and
that, as Construction Agent, it will acquire certain items of Equipment to
be used in connection with such Improvements, and that the Lessee will
lease, as Lessee, such Equipment, Improvements and Land Interest from the
Lessor under the Lease; and
C. the Lessor wishes to obtain, and the Participants are willing to
provide, financing of the funding of the costs of acquisition of such Land
Interest, and, following the Improvements Closing Date, the construction of
the Improvements and the acquisition of such Equipment through the purchase
of Participation Interests in the Advances, the Lease and the Rent.
In consideration of the mutual agreements contained in this Participation
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix 1 hereto for
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all purposes hereof; and the rules of interpretation set forth in Appendix 1
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hereto shall apply to this Participation Agreement.
SECTION 2
CLOSING DATE
The closing date (the "Closing Date") occurred on the date of the execution
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and delivery of the Original Participation Agreement and the other Operative
Documents referred to in Section 6.1 hereof entered into as of such date, which
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was the date on which all the conditions precedent thereto set forth in Sections
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6.1 and 6.3 hereof were satisfied or waived by the applicable parties as set
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forth therein. The Improvements Closing Date shall occur on the date of the
execution and delivery of this Agreement and the other Operative Documents
referred to in Section 6.2 hereof, which shall be the earliest date on which all
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the conditions precedent thereto set forth in Sections 6.2 and 6.3 hereof shall
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have been satisfied or waived by the applicable parties as set forth therein.
SECTION 3
ACQUISITION OF THE PROPERTY; FUNDING OF ADVANCES
Section 3.1 Lessor Commitment; Lessee Covenants.
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(a) Subject to the conditions and terms hereof, the Lessor shall take
the following actions at the written request of the Lessee on or prior to the
Closing Date or from time to time during the Commitment Period, as the case may
be:
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(i) enter into the Operative Documents to be entered into by it
pursuant to the terms hereof;
(ii) make Advances (out of funds provided by the Participants)
for the purpose of financing the acquisition of the Land Interest and,
subject to the satisfaction or waiver of the conditions set forth in
Section 6.2 and 6.3 hereof, the Equipment and construction of the
Improvements; and
(iii) acquire the Land Interest and the Equipment (using funds
provided by the Participants).
Upon the Lease Commencement Date, subject to the terms and conditions
hereof and of the other Operative Documents, the Lessor shall lease the Land
Interest and, subject to the satisfaction or waiver of the conditions set forth
in Section 6.2 and 6.3 hereof, the Improvements, as lessor to the Lessee under
the Lease.
(b) Lessee Covenants. The Lessee shall, on or prior to the Closing
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Date or the Improvements Closing Date, as applicable, enter into the Operative
Documents to be entered into by it on or as of such date pursuant to the terms
hereof and, upon the Lease Commencement Date, subject to the terms and
conditions hereof and of the other Operative Documents, the Lessee shall lease
the Land Interest and, subject to the satisfaction or waiver of the conditions
set forth in Section 6.2 and 6.3 hereof, the Improvements, as Lessee from the
Lessor under the Lease.
Section 3.2 Participants' Commitments. Subject to the terms and
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conditions hereof, each Participant, other than the Lessor, severally shall
purchase a Participation Interest in the Advances being made by the Lessor at
the request of the Lessee from time to time during the Commitment Period by
making available to the Lessor on each Funding Date an amount in immediately
available funds equal to such Participants' Commitment Percentage (as then in
effect) of the amount of the Advance being funded on such Funding Date.
Notwithstanding any other provision hereof, no Participant shall be obligated to
purchase its Participation Interest in any Advance if (i) the amount of such
purchase would exceed its Available Commitment, or (ii) if, after giving effect
to the proposed Advance, the outstanding aggregate amount of such Participant's
Participation Interest in the Advances would exceed such Participant's
Commitment. Lessor shall repay the Participation Interests, together with
accrued interest and yield thereon as provided herein to the extent such amounts
are received under the Lease.
Section 3.3 Procedures for Acquisition of the Land Interest. The Lessee,
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as Construction Agent, shall give the Lessor and the Agent prior written notice
not later than 2:00 p.m. New York time, three Business Days prior to the
proposed Land Interest Acquisition Date (unless the Advance on the Closing Date
is to bear interest and yield at the Alternate Base Rate, in which case such
notice may be given not later than 2:00 p.m. New York time on the Land Interest
Acquisition Date), pursuant to an Acquisition Request substantially in the form
of Exhibit A (an "Acquisition Request"), specifying with respect to such Land
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Interest: (i) the proposed Land Interest Acquisition Date, (ii) the Land
Interest to be acquired, (iii) the Existing Owner of the Land Interest, and (iv)
the date on which the Lessee will request the Lessor to fund
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the Land Interest Acquisition Cost of such Land Interest. The Agent shall
provide notice of such Acquisition Request to each Participant.
Section 3.4 Procedures for Advances. With respect to each funding of an
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Advance, the Lessee, as Construction Agent, shall give the Lessor and the Agent
prior written notice not later than 12:00 Noon, Chicago time, three Business
Days prior to the proposed Funding Date (other than for the Advance on the
Closing Date, if such Advance is to bear interest or yield at a rate equal to
the Alternate Base Rate, where notice shall be on the same Business Day),
pursuant, in each case, to a Funding Request substantially in the form of
Exhibit B (a "Funding Request"), specifying (i) the proposed Funding Date, (ii)
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the amount and purpose of the Advance requested, (iii) the Lessee's election to
cause all or a specified portion of such Advance to bear interest or yield by
reference to the Eurodollar Rate or the Alternate Base Rate and including, in
the case of a Eurodollar Rate Advance, the initial Interest Period therefor,
(iv) the payees of such Advance, (v) that the Advance will be used to fund Land
Interest Acquisition Costs or Property Improvement Costs, (vi) the allocation of
such Advance to the respective Land Interest Acquisition Costs and Property
Improvements Costs (and pro rata portions of the related remittances from the
Participants shall likewise be deemed to be so allocated), and (vii) that, to
the knowledge of the Construction Agent, no Construction Termination Event has
occurred and is continuing as of the date of such Funding Request. The Agent
shall promptly provide notice of such Funding Request to each Participant. The
Lessee, as Construction Agent, shall not request more than one Funding Date
during any calendar month. Each Advance (other than an Interest Payment Advance
or an amount capitalized pursuant to Section 3.7(e)) shall be in a minimum
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amount of $500,000. Subject to the satisfaction or waiver of the conditions
precedent to such Advance set forth in Section 6, each Participant, other than
the Lessor, shall fund its pro rata share of such Advance by making available to
the Lessor its proportionate share of such Advance in immediately available
federal funds by wire transfer to the Agent for deposit to the Lessor's demand
deposit account with the Agent not later than 12:00 noon, Chicago time, on the
applicable Funding Date. Upon (i) the Lessor's receipt of the funds provided by
the Participants with respect to an Advance, and (ii) satisfaction or waiver of
the conditions precedent to such Advance set forth in Section 6, the Lessor
shall (A) in the case of an Advance for the acquisition of the Land Interest,
pay the acquisition price for such Land Interest to the Existing Owner, and (B)
in the case of other Advances, pay Property Improvement Costs to the payees
specified in the applicable Funding Request, or deliver to the Construction
Agent funds that the Construction Agent reasonably believes will be due, in the
sixty (60) days following such Advance, from the Construction Agent to third
parties in respect of Property Improvements Costs, or as payment or
reimbursement of Property Improvements Costs previously paid by the Construction
Agent, in each case from the funds provided by the Participants for such
Advance.
Section 3.5 Allocation of Commitments. Schedule I hereto contains an
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allocation for each Participant of (i) the amount of its Commitment representing
its Tranche A Participation Interest ("Tranche A Participation Interest
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Commitment"), including its Tranche A Land Participation Interest Commitment
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("Tranche A Land Participation Interest Commitment") and its Tranche A
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Improvements Participation Interest Commitment ("Tranche A Improvements
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Participation Interest Commitment"), (ii) the amount of its Commitment
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representing its Tranche B Participation Interest ("Tranche B Participation
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Interest Commitment"), including its Tranche B Land Participation Interest
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Commitment ("Tranche B Land Participation Interest
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Commitment") and its Tranche B Improvements Participation Interest Commitment
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("Tranche B Improvements Participation Interest Commitment"), (iii) the amount
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of its Commitment representing its Tranche C Equity Interest ("Tranche C Equity
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Interest Commitment"), including its Tranche C Equity Interest Land Commitment
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("Tranche C Equity Interest Land Commitment") and its Tranche C Equity Interest
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Improvements Commitment ("Tranche C Equity Interest Improvements Commitment"),
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and (iv) the percentage referred to in the definition of the term "Participation
Interest" in effect both prior to, and from and after, the Completion Date. The
Lessee, the Lessor, the Agent and the Participants have approved all such
allocations and percentages. Schedule I shall be amended as required to reflect
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any changes in the allocations set forth thereon due to transfers among
Participants or the addition of additional Participants pursuant to Section
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12.1.
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Section 3.6 Termination, Reduction, Extension or Increase of
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Participants' Commitment.
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(a) The Lessor shall have the right, upon not less than five Business
Days' written notice to the Agent, to terminate the Participants' Commitments
or, from time to time, to reduce the amount of the Participants' Commitments,
provided that (i) after giving effect to such reduction, the aggregate
outstanding principal amount of the Tranche A Participation Interests shall not
exceed the aggregate Tranche A Participation Interest Commitments, (ii) after
giving effect to such reduction, the aggregate outstanding principal amount of
the Tranche B Participation Interests shall not exceed the aggregate Tranche B
Participation Interest Commitments, (iii) after giving affect to such reduction,
the aggregate outstanding principal balance of the Tranche C Equity Interests
shall not exceed the aggregate Tranche C Equity Interest Commitments, and (iv)
any such reduction shall be made pro rata among the Participants' Commitments
within each Tranche. Prior to the occurrence and continuance of an Event of
Default, the Lessor shall exercise such right only as directed by the Lessee and
after the occurrence and during the continuance of an Event of Default the
Lessor shall exercise such right only as directed by the Required Participants.
(b) The Lessee may, by written request to the Lessor and Agent (which
the Agent shall promptly forward to each Participant, together with the related
Renewal Request received by the Agent pursuant to Section 21.1 of the Lease)
given not later than 180 days prior to the Maturity Date then in effect, request
(each, an "Extension Request") that such Maturity Date be extended to the date
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that is one (1) year after the Maturity Date then in effect. No later than the
date (the "Extension Response Date") which is 90 days after any such request has
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been delivered to each of the Participants, each Participant will notify the
Lessor in writing (with a copy to the Agent and the Lessee) whether or not it
consents to such Extension Request (which consent may be granted or denied by
each Participant in its sole discretion and may be conditioned on receipt of
such financial information or other documentation as may be specified by such
Participant including without limitation satisfactory appraisals of the
Property), provided that any Participant that fails to so advise the Lessor on
or prior to the applicable Extension Response Date shall be deemed to have
denied such Extension Request. The extension of the then-current Maturity Date
contemplated by an Extension Request shall become effective as of the Maturity
Date then in effect (the "Extension Effective Date") on or after the Extension
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Response Date on which all of the Participants (other than Non-Consenting
Participants which
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have been replaced by Replacement Participants in accordance with Section
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3.6(c)) shall have consented to such Extension Request; provided that:
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(A) on both the date of the applicable Extension Request
and the applicable Extension Effective Date, (x) each of the
representations and warranties made by the Lessee and the Lessor in or
pursuant to the Operative Documents shall be true and correct in all
material respects as if made on and as of each such date, except for
representations and warranties made as of a specific date, which shall
be true and correct in all material respects as of such date, (y) no
Default or Event of Default shall have occurred and be continuing, and
(z) on each of such dates the Agent shall have received a certificate
of the Lessee and the Lessor, each as to itself, as to the matters set
forth in clause (x) above and from the Lessee as to the matters set
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forth in clause (y) above, and
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(B) the Agent and the Required Participants shall have
received satisfactory evidence that the Expiration Date shall, after
giving effect to any extension thereof which has become effective on
or prior to such Extension Effective Date, occur on the Maturity Date
then in effect as so extended, and
(C) in no event shall more than two (2) one-year extensions
of the Initial Maturity Date be requested pursuant to this Section
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3.6(b).
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(c) The Lessor (after consultation with, and at the direction of, the
Lessee) shall be permitted to replace any Non-Consenting Participant (an "Other
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Non-Consenting Participant") with one or more replacement banks or other
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financial institutions reasonably acceptable to the Agent and the Lessee (a
"Replacement Participant") at any time on or prior to the date which is 90 days
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after the Extension Response Date; provided that (i) such replacement does not
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conflict with any Requirement of Law, (ii) the Replacement Participant shall
purchase, at par, all of the Participation Interest of such Non-Consenting
Participant, on or prior to the date of replacement, (iii) the Lessee shall be
liable to such Non-Consenting Participant under Section 13.6 of this Agreement
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if any Advance (or any Participation Interest therein) shall be prepaid (or
purchased) other than on the last day of the Interest Period or Interest Periods
relating thereto, (iv) such replacement shall be made in accordance with the
provisions of Section 12 of this Agreement (provided that the Lessee shall be
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obligated to pay the Transaction Expenses arising in connection therewith), and
(v) the Replacement Participant shall have agreed to be subject to all of the
terms and conditions of this Agreement (including the extension of the Maturity
Date contemplated by the Extension Request) and the other Operative Documents.
The Agent hereby agrees to cooperate with the Lessee and the Lessor in their
efforts to arrange one or more Replacement Participants as contemplated by this
Section 3.6(c).
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(d) Intentionally Omitted.
(e) On the earlier of the Completion Date and the Outside Completion
Date, the Participants' Commitments shall be reduced automatically without any
notice or other action by Lessor or any Participant hereunder, to be equal to
the then aggregate outstanding principal amount of the respective Participant's
Participation Interests.
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Section 3.7 Interest Rates, Yield and Payment Dates.
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(a) Each outstanding Advance (other than the Advance to be made on
the Closing Date, which shall bear interest (in the case of the Tranche A
Participation Interests and Tranche B Participation Interests therein) or yield
(in the case of the Tranche C Equity Interest therein) at a rate equal to the
Alternate Base Rate unless and until such Advance is converted to a Eurodollar
Rate Advance in accordance with this Section 3.7(a)) shall bear interest (in the
case of the Tranche A Participation Interests and Tranche B Participation
Interests therein) or yield (in the case of the Tranche C Equity Interest
therein) for each day during each Interest Period with respect thereto (in the
case of a Eurodollar Rate Advance) at a rate per annum (for such Interest
Period, in the case of a Eurodollar Rate Advance) equal to (i) in the case of
any Eurodollar Rate Advance, the Eurodollar Rate two (2) Business Days prior to
the first day of such Interest Period, plus the Applicable Margin then in effect
and (ii) in the case of any Alternate Base Rate Advance, at a rate per annum
equal to the Alternate Base Rate, in each case with respect to either clause (i)
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or (ii) as elected by Lessee in its Funding Request in respect of the relevant
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Advance or in a notice delivered pursuant to this Section 3.7(a).
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Notwithstanding the foregoing, at the option of the Agent, if an Event of
Default shall have occurred and be continuing, the rate payable hereunder with
respect to any Advance shall be the rate then applicable thereto as determined
pursuant to either clause (i) or clause (ii) above, as applicable, plus 2.0% per
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annum. The Lessee shall give irrevocable notice to the Agent, in accordance with
the applicable provisions of the term "Interest Period" set forth in Appendix 1
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and this Section 3.7(a), of the length of each Interest Period to be applicable
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to each Eurodollar Rate Advance. Each of the Participants, Agent, Lessor and
Lessee hereby agree that Lessee shall have the right, by delivering a notice to
Agent on or before 12:00 noon (Chicago, Illinois time) on a Business Day, to
elect irrevocably, on not less than three nor more than five Business Days'
written notice prior to the last day of any then current Interest Period in the
case of a notice requesting a conversion of a Eurodollar Rate Advance into an
Alternate Base Rate Advance, or the continuation of a Eurodollar Rate Advance as
such, that all or any portion of the Advances (in an aggregate minimum amount of
$5,000,000 and integral multiples of $100,000 in excess thereof, in the case of
the conversion of an Alternate Base Rate Advance into a Eurodollar Rate Advance
or the continuation of a Eurodollar Rate Advance as an Advance of such Type) (a)
be converted into an Alternate Base Rate Advance or a Eurodollar Rate Advance,
or (b) be continued as a Eurodollar Rate Advance. Any conversion into, or
continuation of, a Eurodollar Rate Advance shall have Interest Periods (subject
to the limitations set forth in the definition thereof) of the length set forth
in such notice (in the absence of delivery of such notice at least three
Business Days before the last day of any then current Interest Period with
respect to any Eurodollar Rate Advance, Lessee shall be deemed to have elected
to continue the applicable Advance as a Eurodollar Rate Advance and the Interest
Period with respect thereto shall be one month). There shall not be more than
five (5) Interest Periods outstanding at any time.
(b) If all or a portion of (i) the amount of any Advance, (ii) any
interest or yield payable thereon or (iii) any other amount payable hereunder,
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest or yield at a rate per annum
which is equal to the Overdue Rate.
7
(c) After the Completion Date, interest and yield shall be payable in
cash in arrears on each Scheduled Payment Date, provided that (i) interest and
--------
yield accruing pursuant to paragraph (b) of this Section 3.7 shall be payable
------------- -----------
from time to time on demand and (ii) each prepayment of Advances shall be
accompanied by accrued interest and yield to the date of such prepayment on the
amount of Advances so prepaid.
(d) On each date which is three Business Days prior to any Scheduled
Payment Date occurring prior to the Completion Date, the Lessee, as Construction
Agent, shall be deemed to have requested an Advance comprised of an Interest
Payment Advance pursuant to Section 3.4 and the Lessor shall be deemed to have
-----------
requested a purchase pursuant to Section 3.2 of Participation Interests in such
-----------
Advance in an amount equal to the aggregate amount of the interest or yield due
and payable on such date with respect to accrued interest and yield on the
outstanding Advances. The Funding Date with respect to any such Interest Payment
Advance and purchase of Participation Interests therein shall be the relevant
Scheduled Payment Date (provided that such Advance and the purchase of such
--------
Participation Interests shall be subject to satisfaction of the applicable
conditions precedent set forth in Section 6) and the proceeds of such payment
---------
shall be applied to pay such accrued interest and yield.
(e) Capitalization of Certain Amounts Prior to Completion Date.
----------------------------------------------------------
(i) On each date prior to the Completion Date that any amount is
payable under the Operative Documents on account of (A) accrued interest
and accrued yield on outstanding Advances (to the extent provided in
Section 3.7(d)), (B) fees pursuant to Section 4, (C) Transaction Expenses
-------------- ---------
of the Lessor, the Agent or any Participant pursuant to Section 9, or (D)
---------
any other amounts (other than as described in clause (ii) of this Section
----------- -------
3.7(e)) required by any provision of the Operative Documents to be
------
capitalized prior to the Completion Date, such amounts shall be capitalized
by automatically treating such amount as an Advance and a related purchase
of Participation Interests therein made on such date.
(ii) If any Lessor Party shall request the Lessor to capitalize
the amount of (A) any Claims pursuant to clause (5)(A)(2) of the proviso to
----------------
Section 13.1, or (B) any loss or liability pursuant to Section 24.1 of the
------------
Lease, and if the Lessor in its discretion consents to such capitalization,
any such amount shall be capitalized by automatically treating such amount
as an Advance and a related purchase of Participation Interests therein
(funded by such Lessor Party); provided, however, that the Lessee shall
-------- ------
have no obligation to pay any such amounts if the Lessee exercises the
Remarketing Option or is otherwise required to pay the Residual Value
Guarantee Amount in accordance with the Lease and the other Operative
Documents except from the proceeds of the sale or disposition of the
Property. If any such capitalized amounts are included in the Asset
Termination Value, Lease Balance or Participant Balance (the "3.7(e)(ii)
----------
portion" of the Asset Termination Value, Lease Balance or Participant
-------
Balance), all the Lessee payments and other amounts applied to the Asset
Termination Value, Lease Balance or Participant Balance shall be applied as
provided in Sections 3.11 - 3.20 of this Agreement. The Agent shall notify
--------------------
the Lessee, the Lessor and each Participant of each amount capitalized and
treated as an Advance (and a related purchase of Participation
8
Interests therein) under this Section 3.7(e)(ii) within fifteen (15) days
------------------
after each such Advance.
(f) Cash Collateral Agreement.
-------------------------
(i) After the Completion Date, the Lessee will have the option to
pledge Cash Collateral pursuant to the Cash Collateral Agreement against
the Tranche A Participation Interests, the Tranche B Participation
Interests, and the Tranche C Equity Interests, or any portion thereof, to
reduce the Applicable Margin then in effect with respect thereto from time
to time so long as such Cash Collateral is pledged and retained pursuant to
and in accordance with the terms of the Cash Collateral Agreement, provided
that Lessee may not elect such option if at the time thereof an Event of
Default has occurred and is continuing or the amount on deposit in the
Minimum Cash Balance Account is not at least equal to the Required Cash
Balance Amount as of such date. When the Lessee wishes to exercise such
option, it shall deliver to the Agent a request in substantially the form
of Exhibit C (the "Cash Collateral Request") together with an opinion of
--------- -----------------------
counsel reasonably acceptable to Lessor as to the perfection of the
security interests granted in the Cash Collateral, in form and substance
reasonably acceptable to Lessor, no later than five (5) Business Days prior
to the commencement date of the applicable Interest Period and the Lessee
shall deposit such Cash Collateral pursuant to the Cash Collateral
Agreement not later than 1:00 p.m. Chicago time on the last Business Day of
the Interest Period preceding the Interest Period for which the reduction
in the Applicable Margin is to take effect.
(ii) If Lessee's Funded Indebtedness to EBITDA Ratio for any
fiscal quarter ending on or after June 30, 2003 as reflected in the
financial statements provided pursuant to Section 10.1(a)(v) below is
greater than 2.5 to 1, Lessee shall, within 45 days following such fiscal
period, pledge Cash Collateral pursuant to the Cash Collateral Agreement in
an amount equal to the aggregate sum of the outstanding principal amounts
of the Land Advances and the Improvement Advances (including amounts
capitalized pursuant to Section 3.7(e) hereof) and deliver to Lessee an
opinion of counsel reasonably acceptable to Lessor as to the perfection of
the security interests granted in the Cash Collateral if not previously
provided under Section 3.7(f)(i), in form and substance reasonably
acceptable to Lessor, such Cash Collateral to be pledged and retained
pursuant to and in accordance with the terms of the Cash Collateral
Agreement until Lessee otherwise comes into compliance with such financial
ratio.
Section 3.8 Computation of Interest and Yield.
---------------------------------
(a) Whenever it is calculated on the basis of the Alternate Base
Rate, interest and yield shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed; otherwise, interest and
yield shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Lessor, the Lessee
and the Participants of each determination of a Eurodollar Rate. Any change in
the interest rate or yield rate on an Advance resulting from a change in the
Alternate Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify
9
the Lessor, the Lessee and the Participants of the effective date and the amount
of each such change in interest rate or yield rate.
(b) Each determination of an interest rate or a yield rate by the
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Lessor, the Lessee and the Participants in the absence of
manifest error. The Agent shall, at the request of such parties, deliver to such
parties a statement showing the quotations used by the Agent in determining any
interest rate or yield rate pursuant to Section 3.8(a).
--------------
Section 3.9 Pro Rata Treatment and Payments.
-------------------------------
(a) Each participation in the Advances by the Participants hereunder
and each reduction of the Commitments of the Participants shall be made pro rata
among the Tranche A Participants, Tranche B Participants and Tranche C
Participants according to the respective Commitment Percentages of each such
Participant then in effect. Except as otherwise provided in Sections 3.11 -
-------------
3.20, each payment (including each prepayment) by the Lessor on account of
----
Participation Interests representing the amount of principal and interest or
yield on the Advances shall be made pro rata among the Tranche A Participants,
Tranche B Participants and Tranche C Participants according to the respective
Participation Interests of each such Participant then in effect. Any payment
required to be made to the Participants in any particular Tranche shall be made
pro rata among such Participants, without priority of any one such Participant
over any others within such Tranche, in the proportion that such Participant's
Participant Balance within such Tranche bears to the aggregate Participant
Balances of all Participants within such Tranche. All payments (including
prepayments) to be made by the Lessor hereunder to the Participants with respect
to their Participation Interests, whether on account of principal, interest,
yield or otherwise, shall be payable to the extent received by the Lessor from
or on behalf of the Lessee, shall be made without setoff or counterclaim and
shall be made prior to 2:00 p.m., Chicago time, on the due date thereof to the
Agent, for the account of the Participants, at the Agent's office referred to in
Section 15.3 of this Agreement, in Dollars and in immediately available funds.
------------
The Agent shall distribute such payments to the Participants promptly upon
receipt in like funds as received; it being understood that any such payment
received by the Agent on a timely basis and in accordance with the provisions of
the Lease shall be distributed on the date on which such funds are so received.
If any payment hereunder (other than payments of Participation Interests in the
Advances) becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day. If any payment of
Participation Interests in an Advance becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day. In the case of any extension or
shortening of the due date of any payment pursuant to the preceding two
sentences, interest or yield thereon shall be payable at the then applicable
rate during such extension or until such shortened due date, as the case may be.
(b) Unless the Agent shall have been notified in writing by any
Participant prior to funding its Participation Interest in an Advance that such
Participant will not make its share of such Advance available to the Agent, the
Agent may assume that such Participant is making such amount available to the
Agent. If such Participant's share of such Advance is not
10
made available to the Agent by such Participant on or prior to such Funding
Date, the Lessor shall not be required to make such portion of such Advance to
the Lessee.
Section 3.10 The Account. The Agent may if it so desires establish an
-----------
account (the "Account") into which the Agent and the Lessor shall deposit all
-------
payments, receipts and other consideration of any kind whatsoever paid under the
Lease and received by the Agent or the Lessor pursuant to this Agreement, the
Lease and any other Operative Document. Each of the Agent and the Lessor hereby
irrevocably instructs the Lessee, and the Lessee hereby agrees, until otherwise
notified by the Agent, that all payments to be made by the Lessee to or for the
benefit of the Lessor or the Agent pursuant to the Lease or any of the other
Operative Documents shall be made directly to the Agent. The Agent shall make
distributions of such payments, receipts and other consideration (and, if an
Account is used, from the Account) pursuant to the requirements of Sections
--------
3.11- 3.20 hereof.
---- ----
Section 3.11 Basic Rent. Each payment (or portion thereof) of Basic Rent
----------
comprising interest or yield on the Advances (and any payment of interest on
overdue installments of such components of Basic Rent) received by the Agent
shall be distributed by the Agent first, to the Tranche A Participants and
Tranche B Participants pro rata, and second to the Tranche C Participants pro
rata, in accordance with, and for application to, the portion of their
Participation Interests in such portion of Basic Rent, as well as in any overdue
interest due to such Participant (to the extent permitted by applicable law).
Section 3.12 Purchase Payments by Lessee. Any payment received by the
---------------------------
Agent as a result of:
(a) the purchase of the Lessor's interest in the Property in
connection with the Lessee's exercise of its Purchase Option under Section 20.1
of the Lease or its Partial Purchase Option under Section 20.1 of the Lease, or
(b) the Lessee's compliance with its obligation to purchase the
Lessor's interest in the Property in accordance with Section 20.2 or 20.3 of the
Lease, or
(c) the payment of the Land Asset Termination Value and/or
Improvements Asset Termination Value in accordance with Sections 16.2(b) or 16.3
of the Lease,
shall be distributed by the Agent in the following order of priority:
(i) proceeds in respect of the Land Interest (except as
provided in (iii) below) shall be distributed among the Land Participants
as follows:
first, to the Tranche A Land Participants and the
-----
Tranche B Land Participants, pro rata, for application to pay in
full the Tranche A Land Participant Balance and Tranche B Land
Participant Balance (other than any 3.7(e)(ii) portion thereof)
of each such Land Participant, and in the case where the amount
so distributed shall be insufficient to pay in full as aforesaid,
then pro rata among such Land Participants;
--- ----
11
second, to the Tranche A Land Participants and the Tranche B
------
Land Participants, pro rata to pay in full the 3.7(e)(ii) portion of
their Tranche A Land Participant Balances and Tranche B Land
Participation Balances until such portion of such Participant Balances
have been paid in full; and in any case where the amount shall be
insufficient to pay in full as aforesaid, then pro rata among the such
--- ----
Land Participants;
third, to the Tranche C Land Participants for application to
-----
pay in full the Tranche C Land Participant Balance (other than any
3.7(e)(ii) portion thereof) of each Tranche C Land Participant, and in
the case where the amount so distributed shall be insufficient to pay
in full as aforesaid, then pro rata among the Tranche C Land
--- ----
Participants; and
fourth, to the Tranche C Land Participants to pay in full
------
the 3.7(e)(ii) portion of their Tranche C Land Participant Balances
until their Tranche C Land Participant Balances have been paid in
full; and in any case where the amount shall be insufficient to pay in
full as aforesaid, then pro rata among the Tranche C Land
--- ----
Participants.
(ii) proceeds in respect of the Improvements (except as provided
in (iii) below) shall be distributed among the Improvements Participants as
follows:
first, to the Tranche A Improvements Participants and the
-----
Tranche B Improvements Participants, pro rata, for application to pay
in full the Tranche A Improvements Participant Balance and Tranche B
Improvements Participant Balance (other than any 3.7(e)(ii) portion
thereof) of each such Improvements Participant, and in the case where
the amount so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among such Improvements Participants;
--- ----
second, to the Tranche A Improvements Participants and the
------
Tranche B Improvements Participants, pro rata, to pay in full the
3.7(e)(ii) portion of their Tranche A Improvements Participant
Balances and Tranche B Improvements Participants Balances until such
portion of such Participant Balances have been paid in full; and in
any case where the amount shall be insufficient to pay in full as
aforesaid, then pro rata among such Improvements Participants;
--- ----
third, to the Tranche C Improvements Participants for
-----
application to pay in full the Tranche C Improvements Participant
Balance (other than any 3.7(e)(ii) portion thereof) of each Tranche C
Improvements Participant, and in the case where the amount so
distributed shall be insufficient to pay in full as aforesaid, then
pro rata among the Tranche C Improvements Participants; and
--- ----
fourth, to the Tranche C Improvements Participants to pay in
------
full the 3.7(e)(ii) portion of their Tranche C Improvements
Participant Balances until their Tranche C Improvements Participant
Balances have been paid in full; and in
12
any case where the amount shall be insufficient to pay in full as
aforesaid, then pro rata among the Tranche C Improvements
--- ----
Participants.
(iii) application of any proceeds in respect of the Cash
Collateral Agreement or the Minimum Cash Balance Collateral Agreement shall
be distributed as follows:
first, to the Tranche A Participants and the Tranche
-----
B Participants, pro rata, for application to pay in full the
Participant Balance (other than any 3.7(e)(ii) portion thereof) of
each such Participant, and in the case where the amount so distributed
shall be insufficient to pay in full as aforesaid, then pro rata among
--- ----
such Participants;
second, to the Tranche A Participants and the Tranche
------
B Participants, pro rata to pay in full the 3.7(e)(ii) portion of
their Participant Balances until such portion of such Participant
Balances have been paid in full; and in any case where the amount
shall be insufficient to pay in full as aforesaid, then pro rata among
--- ----
such Participants;
third, to the Tranche C Participants for application
-----
to pay in full the Tranche C Participant Balance (other than any
3.7(e)(ii) portion thereof) of each Tranche C Participant, and in the
case where the amount so distributed shall be insufficient to pay in
full as aforesaid, then pro rata among the Tranche C Participants; and
--- ----
fourth, to the Tranche C Participants to pay in full
------
the 3.7(e)(ii) portion of their Tranche C Participant Balances until
their Tranche C Participant Balances have been paid in full; and in
any case where the amount shall be insufficient to pay in full as
aforesaid, then pro rata among the Tranche C Participants.
--- ----
Section 3.13 Residual Value Guarantee Amount Payment by Lessee. The
-------------------------------------------------
payment by the Lessee of any Residual Value Guarantee Amount in accordance with
Section 17.2(h) of the Lease, Section 3.4(b) of the Construction Agency
Agreement or Article XXII of the Lease shall be distributed by the Agent in the
following order of priority:
(a) payments in respect of the Land Interest Residual Value Guarantee
Amount (except as provided in (c) below) shall be distributed among the Land
Participants as follows:
first, to the Tranche A Land Participants for application to pay in
-----
full the Tranche A Land Participant Balance of each Tranche A Land
Participant, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among such Tranche
--- ----
A Land Participants;
second, to the Tranche B Land Participants for application to pay in
------
full the Tranche B Land Participant Balance of each Tranche B Land
Participant, and in the case
13
where the amount so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among such Tranche B Land Participants; and
--- ----
third, to the Tranche C Land Participants for application to pay in
-----
full the Tranche C Land Participant Balance of each Tranche C Land
Participant, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among such Tranche
--- ----
C Land Participants.
(b) payments in respect of the Improvements Residual Value Guarantee
Amount (except as provided in (c) below) shall be distributed among the
Improvements Participants as follows:
first, to the Tranche A Improvements Participants for application to
-----
pay in full the Tranche A Improvements Participant Balance of each Tranche
A Improvements Participant, and in the case where the amounts so
distributed shall be insufficient to pay in full as aforesaid, then pro
---
rata among the Tranche A Improvements Participants;
----
second, to the Tranche B Improvements Participants for application to
------
pay in full the Tranche B Improvements Participant Balance of each Tranche
B Improvements Participant, and in the case where the amounts so
distributed shall be insufficient to pay in full as aforesaid, then pro
---
rata among the Tranche B Improvements Participants; and
----
third, to the Tranche C Improvements Participants for application to
-----
pay in full the Tranche C Improvements Participant Balance of each Tranche
C Improvements Participant, and in the case where the amounts so
distributed shall be insufficient to pay in full as aforesaid, then pro
---
rata among the Tranche C Improvements Participants.
----
(c) application of any proceeds in respect of the Cash Collateral
Agreement or the Minimum Cash Balance Collateral Agreement following exercise by
the Lessee of the Remarketing Option shall be distributed among the Participants
as follows, subject to Section 22.1 of the Lease:
first, to the Tranche A Participants for application to pay in full
-----
the Tranche A Participant Balance of each Tranche A Participant and in the
case when the amount so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among such Tranche A Participants;
--- ----
second, to the Tranche B Land Participants and the Tranche C Land
------
Participants for application to pay in full the Tranche B Land Participant
Balance of each Tranche B Land Participant and the Tranche C Participant
Balance of each Tranche C Land Participant, and in the case where the
amount so distributed shall be insufficient to pay in full as aforesaid,
then pro rata among such Tranche B Land Participants and Tranche C Land
--- ----
Participants.
Section 3.14 Sales of Proceeds of Property. Any payments received by the
-----------------------------
Agent as proceeds from the sale of the Property sold following the occurrence of
an Event of Default under Article XVII of the Lease (in the case of any portion
of such proceeds which, pursuant to
14
Section 3.17, are required to be distributed in accordance with this Section
------------ -------
3.14), following the occurrence of a Construction Termination Event or pursuant
----
to the Lessee's exercise of the Remarketing Option pursuant to Article XXII of
the Lease, together with any payment made by the Lessee as a result of an
appraisal pursuant to Section 13.2 of this Agreement, shall be distributed by
------------
the Agent in the following order of priority:
(a) payments in respect of the Land Interest shall be distributed
among the Land Participants as follows:
first, to the Tranche B Land Participants for application to pay in
-----
full the Tranche B Land Participant Balance (other than any 3.7(e)(ii)
portion thereof) of each Tranche B Land Participant, and in the case where
the amount so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among the Tranche B Land Participants;
--- ----
second, to the Tranche A Land Participants for application to pay in
------
full the Tranche A Land Participant Balance (other than any 3.7(e)(ii)
portion thereof) of each Tranche A Land Participant, and in the case where
the amount so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among the Tranche A Land Participants;
--- ----
third, to the Tranche C Land Participants for application to pay in
-----
full the Tranche C Land Participant Balance (other than any 3.7(e)(ii)
portion thereof) of each Tranche C Land Participant, and in the case where
the amount so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among the Tranche C Land Participants;
--- ----
fourth, to the Tranche B Land Participants to pay in full the
------
3.7(e)(ii) portion of their Tranche B Land Participant Balances until their
Tranche B Land Participant Balances have been paid in full; and in any case
where the amount shall be insufficient to pay in full as aforesaid, then
pro rata among the Tranche B Land Participants;
--- ----
fifth, to the Tranche A Land Participants to pay in full the
-----
3.7(e)(ii) portion of their Tranche A Land Participant Balances until their
Tranche A Land Participant Balances have been paid in full; and in any case
where the amount shall be insufficient to pay in full as aforesaid, then
pro rata among the Tranche A Land Participants;
--- ----
sixth, to the Tranche C Land Participants to pay in full the
-----
3.7(e)(ii) portion of their Tranche C Land Participant Balances until their
Tranche C Land Participant Balances have been paid in full; and in any case
where the amount shall be insufficient to pay in full as aforesaid, then
pro rata among the Tranche C Land Participants; and
--- ----
seventh, the balance, if any, shall be promptly distributed to, or as
-------
directed by, the Lessee.
(b) payments in respect of the Improvements shall be distributed
among the Improvements Participants as follows:
15
first, to the Tranche B Improvements Participants for application to
-----
pay in full the Tranche B Improvements Participant Balance (other than any
3.7(e)(ii) portion thereof) of each Tranche B Improvements Participant, and
in the case where the amount so distributed shall be insufficient to pay in
full as aforesaid, then pro rata among the Tranche B Improvements
--- ----
Participants;
second, to the Tranche A Improvements Participants for application to
------
pay in full the Tranche A Improvements Participant Balance (other than any
3.7(e)(ii) portion thereof) of each Tranche A Improvements Participant, and
in the case where the amount so distributed shall be insufficient to pay in
full as aforesaid, then pro rata among the Tranche A Improvements
--- ----
Participants;
third, to the Tranche C Improvements Participants for application to
-----
pay in full the Tranche C Improvements Participant Balance (other than any
3.7(e)(ii) portion thereof) of each Tranche C Improvements Participant, and
in the case where the amount so distributed shall be insufficient to pay in
full as aforesaid, then pro rata among the Tranche C Improvements
--- ----
Participants;
fourth, to the Tranche B Improvements Participants to pay in full the
------
3.7(e)(ii) portion of their Tranche B Improvements Participant Balances
until their Tranche B Improvements Participant Balances have been paid in
full; and in any case where the amount shall be insufficient to pay in full
as aforesaid, then pro rata among the Tranche B Improvements Participants;
--- ----
fifth, to the Tranche A Improvements Participants to pay in full the
-----
3.7(e)(ii) portion of their Tranche A Improvements Participant Balances
until their Tranche A Improvements Participant Balances have been paid in
full; and in any case where the amount shall be insufficient to pay in full
as aforesaid, then pro rata among the Tranche A Improvements Participants;
--- ----
sixth, to the Tranche C Improvements Participants to pay in full the
-----
3.7(e)(ii) portion of their Tranche C Improvements Participant Balances
until their Tranche C Improvements Participant Balances have been paid in
full; and in any case where the amount shall be insufficient to pay in full
as aforesaid then pro rata among the Tranche C Improvements Participants;
--- ----
and
seventh, the balance, if any, shall be promptly distributed to or as
-------
directed by the Lessee.
(c) The parties hereto acknowledge and agree that, in the event of a
sale of the Property following the occurrence of an Event of Default under
Article XVII of the Lease, the proceeds received from such sale shall be
allocated among the Participants as follows (i) a portion of such proceeds equal
to (x) the amount of the Land Asset Termination Value divided by (y) the
aggregate Asset Termination Value, shall be deemed to have been received in
respect of the Land Interest and shall be allocated to the Land Participants for
distribution in accordance with Section 3.14(a) above, and (ii) a portion of
---------------
such proceeds equal to (x) the amount of the Improvements Asset Termination
Value divided by (y) the aggregate Asset Termination Value,
16
shall be deemed to have been received in respect of the Improvements and shall
be allocated to the Improvements Participants for distribution in accordance
with Section 3.14(b) above.
---------------
Section 3.15 Supplemental Rent. All payments of Supplemental Rent
-----------------
received by the Agent (excluding any amounts payable pursuant to the preceding
provisions of this Section 3) shall be distributed promptly by Agent upon
---------
receipt thereof to the Persons entitled thereto pursuant to the Operative
Documents.
Section 3.16 Excepted Payments. Notwithstanding any other provision of
-----------------
this Agreement or the Operative Documents, any Excepted Payment received at any
time by the Agent shall be distributed promptly to the Person entitled to
receive such Excepted Payment pursuant to the Operative Documents.
Section 3.17 Distribution of Payments After Event of Default. All
-----------------------------------------------
payments received and amounts realized by the Lessor or the Agent after an Event
of Default exists, including under the Cash Collateral Agreement or the Minimum
Cash Balance Collateral Agreement and proceeds from the sale of any of the
Property, proceeds of any amounts from any insurer or any Governmental Authority
in connection with any Casualty or Condemnation, or from Lessee as payment in
accordance with the Lease, including any payment received from Lessee pursuant
to Article XVII of the Lease, shall, if received by Lessor, be paid to the Agent
as promptly as possible and shall be distributed by the Agent in the following
order of priority:
first, so much of such payment or amount as shall be required to
-----
reimburse the Lessor or the Agent for any tax, expense or other loss
incurred by the Lessor or the Agent (including, to the extent not
previously reimbursed, those incurred in connection with any duties of the
Agent as the Agent) and any unpaid ongoing fees of the Lessor and the Agent
shall be distributed to each of them for its own account;
second, so much of such payments or amounts as shall be required to
------
reimburse the then existing or prior Participants for payments made by them
to the Lessor pursuant to Section 18.1 of the Lease (to the extent not
previously reimbursed) and to pay such then existing or prior Participants
the amounts payable to them pursuant to any expense reimbursement or
indemnification provisions of the Operative Documents shall be distributed
to each such Participant without priority of one over the other in
accordance with the amount of such payment or payments payable to each such
Person;
third, (i) in the case of a sale of the Property, in the order set
-----
forth in Section 3.14; (ii) in the case of the payment of any Residual
------------
Value Guarantee Amount or Asset Termination Value in connection with a
remarketing or return of the Property pursuant to Section 17.2(h) of the
Lease prior to the Completion Date, in the order of priority set forth in
the applicable provisions of Section 3.13; and (iii) in all other cases, so
------------
much of such amount as shall be required to pay in full the Participant
Balance of each Participant, and in the case where the amount so
distributed shall be insufficient to pay in full as aforesaid, then in the
order of priority set forth in Section 3.12(c)(i), in the case of the Land
------------------
Interest, or Section 3.12(c)(ii), in the case of the Improvements; and in
-------------------
any case where the amount of any such payment in this clause (iii) shall be
------------
insufficient to pay in
17
full as aforesaid, then pro rata within a Tranche without priority of any
--- ----
Participation Interest in such Tranche over any other Participation
Interest within such Tranche; and
fourth, the balance, if any, of such payment or amounts remaining
------
thereafter shall be promptly distributed to, or as directed by, the Lessee.
Section 3.18 Other Payments.
--------------
(a) Except as otherwise provided in Sections 3.11, 3.12, 3.17 and
------------- ---- ----
paragraph (b) below,
--------- ---
(i) any payment received by the Agent for which no provision as
to the application thereof is made in the Operative Documents or elsewhere
in this Section 3, and
---------
(ii) all payments received and amounts realized by the Lessor or
the Agent under the Lease or otherwise with respect to the Property, the
Cash Collateral or the Minimum Cash Balance Collateral to the extent
received or realized at any time after indefeasible payment in full of the
Participant Balances of all of the Participants and any other amounts due
and owing to the Lessor, the Participants or the Agent,
shall be distributed forthwith by the Agent in the order of priority set forth
in Section 3.12(c)(i), in the case of the Land Interest, or Section 3.12(c)(ii),
------------------ -------------------
in the case of the Improvements (in the case of any payment described in clause
------
(i) above) or in Section 3.17 hereof (in the case of any payment described in
--- -------------------
clause (ii) above), except, that in the case of any payment described in clause
----------- ------
(ii) above, such payment shall be distributed omitting clause third of such
---- ------------
Section 3.17; and the balance, if any (in the case of any payment described in
------------
clause (i) or (ii) above), shall be distributed to, or as directed by, the
---------- ----
Lessee.
(b) Except as otherwise provided in Sections 3.11 and 3.12 hereof,
------------- ----
any payment received by the Agent for which provision as to the application
thereof is made in an Operative Document but not elsewhere in this Section 3
---------
shall be distributed forthwith by the Agent to the Person and for the purpose
for which such payment was made in accordance with the terms of such Operative
Document.
Section 3.19 Casualty and Condemnation Amounts. Any amounts payable to
---------------------------------
the Lessor as a result of a Casualty or Condemnation pursuant to Section 15.1 of
the Lease (but excluding any amounts payable pursuant to Section 16.2 of the
Lease) shall, if no Lease Event of Default exists, be paid over to Lessee for
the rebuilding or restoration of that portion of the Property to which such
Casualty or Condemnation applied, and any excess proceeds shall be paid to the
Lessee. If a Lease Event of Default exists, then during the continuance of such
Lease Event of Default, all such amounts shall be delivered pursuant to the Cash
Collateral Agreement to be held as Cash Collateral and upon exercise of the
Lessor's remedies under the Operative Documents shall be distributed pursuant to
Section 3.17.
------------
Section 3.20 Order of Application. To the extent any payment made to any
--------------------
Participant pursuant to Sections 3.12, 3.13, 3.14 or 3.17(a) is insufficient to
------------- ---- ---- -------
pay in full the
18
Participant Balance of such Participant, then each such payment shall first be
applied to its Participation Interest in accrued interest or yield and then to
its Participation Interest in principal or the equity component of the Advances.
SECTION 4
FEES
Section 4.1 Commitment Fees. The Lessor shall pay to the Agent for the
---------------
account of each Participant a commitment fee (the "Commitment Fees") for the
---------------
period from and including the Closing Date to the earlier of (i) the Completion
Date or (ii) the Outside Completion Date, computed in the case of each
Participant at a rate per annum equal to the Commitment Fee Rate multiplied by
the Available Commitments of such Participant, in each case during the period
for which payment is made, payable in arrears on each Commitment Fee Payment
Date. Commitment Fees shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed. The Commitment Fee shall
be funded by Advances funded by the Participants and capitalized as provided in
Section 3.7(e)(i).
-----------------
Section 4.2 Arrangement Fee; Other Fees. The Lessor paid to the Arranger
---------------------------
an arrangement fee (the "Arrangement Fee") on the Closing Date as set forth in
---------------
the Fee Letter, which fee was funded by an Advance funded by the Participants
and capitalized as provided in Section 3.7(e)(i). In addition, the Lessor shall
-----------------
pay (a) to the Arranger an underwriting and structuring fee (the "Structuring
-----------
Fee") on the Improvements Closing Date as set forth in the Supplemental Fee
---
Letter, and (b) to the Agent, for the benefit of each of the Improvements
Participants, such Upfront Fees as are payable to each such Participant. The
Structuring Fee and the Upfront Fees shall be funded by Advances funded by the
Participants and capitalized as provided in Section 3.7(e)(i).
-----------------
Section 4.3 Administration Fee. During the Construction Period, the
------------------
Lessor, and thereafter, the Lessee, shall pay to the Agent for its own account
an annual administration fee (the "Administration Fee") in the amount set forth
------------------
in the Fee Letter, payable annually in advance on the Closing Date and
thereafter on each anniversary of the Closing Date to but excluding the
Expiration Date. During the Construction Period, the Administrative Fee shall be
funded by an Advance funded by the Participants and capitalized as provided in
Section 3.7(e)(i). From and after the Completion Date, the Administration Fee
-----------------
shall be paid by the Lessee annually in advance on each anniversary of the
Closing Date during the Term (excluding the Expiration Date).
Section 4.4 Overdue Fees. If all or a portion of any fee due hereunder
------------
shall not be paid when due, such overdue amount shall bear interest, payable by
the Lessee on demand, at a rate per annum equal to the Overdue Rate from the
date of such nonpayment until such amount is paid in full (as well after as
before judgment).
19
SECTION 5
CERTAIN INTENTIONS OF THE PARTIES
Section 5.1 Nature of Transaction.
---------------------
(a) It is the intent of the parties hereto that: (i) the Lease
constitutes an "operating lease" pursuant to Statement of Financial Accounting
Standards No. 13, as amended and interpreted, for purposes of Lessee's financial
reporting, and (ii) for purposes of federal, state and local income or franchise
taxes (and any other tax imposed on or measured by income), and documentary,
intangibles and transfer taxes, the transaction contemplated hereby is a
financing arrangement and preserves ownership in the Property in the Lessee. The
parties shall take no action inconsistent with such intention. Nevertheless, the
Lessee acknowledges and agrees that neither the Agent, the Lessor nor any
Participant has made any representations or warranties to the Lessee concerning
the tax, accounting or legal characteristics of the Operative Documents and that
the Lessee has obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents as it deems appropriate.
(b) Specifically, without limiting the generality of subsection
----------
(a) of this Section 5.1, the parties hereto intend and agree that with respect
--- -----------
to the nature of the transactions evidenced by the Lease in the context of the
exercise of remedies under the Operative Documents, in the case of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America, any State or Commonwealth thereof or any foreign country
affecting the Lessee, the Lessor or any Participant or any enforcement or
collection actions arising out of or relating to bankruptcy or insolvency laws,
(i) the transactions evidenced by the Operative Documents shall be deemed to be
loans made by the Lessor and the Participants as unrelated third party lenders
to the Lessee secured by the Property, (ii) the obligations of the Lessee under
the Lease to pay Basic Rent, Supplemental Rent, Asset Termination Value or
Residual Value Guarantee Amount in connection with any purchase or sale of the
Property pursuant to the Lease shall be treated as payments of interest on and
principal of, respectively, loans from the Lessor and the Participants to the
Lessee, and (iii) the Lease grants a security interest and mortgage, deed of
trust or lien, as the case may be, in the Property to the Lessor and assigned by
the Lessor to the Agent for the benefit of the Participants to secure the
Lessee's performance and payment of all amounts under the Lease and the other
Operative Documents.
(c) If the transaction evidenced by this Agreement and the other
Operative Documents can no longer be treated as an operating lease pursuant to
GAAP for accounting purposes, all provisions in the Operative Documents limiting
the Lessee's obligation to pay the Asset Termination Value (including the
Remarketing Option) shall no longer apply. If any such change in accounting
treatment shall occur, the Lessee, the Lessor, the Agent and the Participants
shall negotiate in good faith to enter into such amendments to the Operative
Documents as may be reasonably necessary or desirable to reflect the foregoing.
Section 5.2 Amounts Due Under Lease. Anything else herein or elsewhere
-----------------------
to the contrary notwithstanding, it is the intention of the Lessee, the Lessor,
the Participants and the Agent that: (i) the amount and timing of installments
of Basic Rent due and payable from time to
20
time from the Lessee under the Lease shall be equal to the aggregate payments
due to the Participants in respect of their Participation Interests on each
Payment Date; (ii) if the Lessee elects the Purchase Option or becomes obligated
to purchase the Property under the Lease, the Participation Interests, all fees
and all of the interest on overdue amounts thereon and all other obligations of
the Lessee owing to the Lessor, the Participants and the Agent shall be paid in
full by the Lessee; (iii) if the Lessee elects the Partial Purchase Option, the
Participation Interests, all fees and all of the interest on overdue amounts
thereon and all other obligations of the Lessee owing to the Lessor, the
Participants and the Agent, in each case to the extent attributable to the
portion of the Property so purchased, shall be paid in full by the Lessee; (iv)
if the Lessee properly elects the Remarketing Option, the Lessee shall only be
required to pay to the Lessor the proceeds of the sale of the Property, the
Residual Value Guarantee Amount and any amounts due pursuant to Section 13 of
----------
this Participation Agreement and Section 22.2 of the Lease (which aggregate
amounts with respect to the Improvements may be less than the Improvements Asset
Termination Value); and (v) upon a Lease Event of Default resulting in an
acceleration of the Lessee's obligation to purchase the Property under the
Lease, the amounts then due and payable by the Lessee under the Lease shall
include all amounts necessary to pay in full the Asset Termination Value, plus
all other amounts then due from the Lessee to the Participants, the Agent and
the Lessor under the Operative Documents.
SECTION 6
CONDITIONS PRECEDENT TO CLOSING DATE AND ADVANCES
Section 6.1 Conditions Precedent - Land Interest. The occurrence of the
------------------------------------
Closing Date, the obligation of the Lessor to acquire the Land Interest on the
Land Interest Acquisition Date and to make the Advance in respect of the Land
Interest on the Land Interest Acquisition Date, the obligation of the Lessor to
fund any Interest Payment Advance or other capitalized amount on any Funding
Date in respect of the Land Interest, and the obligation of each Participant to
purchase its Participation Interest in, and to make available to the Lessor its
related portion of, each such Advance on such Funding Date are subject to
satisfaction or waiver of the following conditions precedent and the conditions
precedent set forth in Section 6.3 (it being understood that the Lessor's
-----------
obligation to acquire such Land Interest shall not be subject to the conditions
precedent set forth in this Section 6.1 or Section 6.3 to the extent such
----------- -----------
conditions are actions required of the Lessor) on or prior to the Closing Date,
the Land Interest Acquisition Date or such Funding Date, as the case may be:
(a) Acquisition and Funding Request. On or prior to the Land
-------------------------------
Interest Acquisition Date or applicable Funding Date, the Agent and the Lessor
shall have received a fully executed counterpart of the Acquisition Request or
Funding Request, as the case may be, appropriately completed by the Lessee,
acting as Construction Agent, in accordance with Sections 3.3 and 3.4,
------------ ---
respectively; provided, that this condition shall be deemed to have been
--------
satisfied in connection with an Interest Payment Advance pursuant to Section
-------
3.7(d) hereof or any amount capitalized pursuant to Section 3.7(e) hereof.
------ --------------
(b) Operative Documents. Each of the Operative Documents to be
-------------------
entered into on or prior to the Closing Date shall have been duly authorized,
executed and delivered by
21
the parties thereto, and shall be in full force and effect, including, without
limitation, (i) this Participation Agreement, (ii) the Lease, (iii) the Land
Lease Supplement; (iv) the Construction Agency Agreement, (v) the Construction
Agency Agreement Assignment, (vi) the Mortgage, (vii) the Assignment of Lease,
(viii) the Consent to Assignment, (ix) the Assignment and Assumption of Purchase
Agreement, (x) the Memorandum of Option, (xi) the Subordination Agreement, (xii)
the Cash Collateral Agreement, and (xiii) the Deed. No Default or Event of
Default shall exist thereunder (both before and after giving effect to the
transactions contemplated by the Operative Documents), and the Lessor, the Agent
and each Participant shall each have received a fully executed copy of each of
the Operative Documents (other than the Lease, Land Lease Supplement, the
Mortgage, the Assignment of Lease and the Subordination Agreement of which the
Agent shall receive the original and the Lessor and the Participants shall
receive specimens). On or prior to the Closing Date, the Operative Documents (or
memoranda thereof), any supplements thereto and any financing statements in
connection therewith required under the Uniform Commercial Code shall have been
recorded, registered and filed, if necessary, in such manner as to enable the
Lessee's counsel to render its opinion referred to in clause (l) below.
----------
(c) Environmental Certificate. On or prior to the Closing Date, the
-------------------------
Agent, each Participant and the Lessor shall have received an Environmental
Certificate substantially in the form of Exhibit D (an "Environmental
--------- -------------
Certificate") with respect to the Property, accompanied by the Environmental
-----------
Audit for the Property, addressed to the Agent, each Participant and Lessor,
each of which shall have been approved by the Agent, the Required Participants
and the Lessor, it being understood and agreed that the Lessee agrees to provide
a Phase II environmental site assessment with respect to any Recognized
Environmental Conditions (as defined in the certificate) shown on such
certificate or indicated in the Environmental Audit within ninety (90) days
following the Closing Date if requested by the Agent and the Required
Participants, to remedy any such conditions within two hundred seventy (270)
days following the Closing Date and to deliver to the Agent, the Lessor and each
Participant upon completion of such remedial action a written statement by the
consultant which prepared the Environmental Audit indicating that all such
exceptions have been remedied in compliance with Applicable Law.
(d) Appraisal. On or prior to the Closing Date, the Agent, the Lessor
---------
and the Participants shall have received an Appraisal of the Land Interest,
which Appraisal shall show as of the Closing Date the Fair Market Sales Value of
the Land Interest (which Fair Market Sales Value as of the Closing Date shall
not be less than the aggregate amount of the Commitments related to the Land
Interest), and meet the other applicable requirements set forth in the
definition of the term "Appraisal" contained in Appendix 1.
----------
(e) Property Purchase Agreement Conditions; Land Interest Acquisition
-----------------------------------------------------------------
Documents. On or prior to the Closing Date, the Lessor and the Agent shall have
---------
received a copy of the Property Purchase Agreement; the Property Purchase
Agreement shall be in full force and effect and shall have been validly assigned
to the Lessor pursuant to the Assignment and Assumption of Purchase Agreement;
and the conditions to closing under the Property Purchase Agreement shall have
been satisfied or waived by the Lessor, the Agent and the Participants. On the
Land Interest Acquisition Date, the Lessor shall have received a grant deed
22
(the "Deed"), in conformity with Applicable Law and appropriate for recording
----
with the applicable Governmental Authorities, with respect to the Land Interest,
conveying fee simple title to the Land Interest to the Lessor, subject only to
Permitted Exceptions.
(f) Land Lease Supplement. The Lessee and the Lessor shall have
---------------------
delivered on or prior to the Land Interest Acquisition Date, an original
counterpart of the Land Lease Supplement executed by the Lessee and the Lessor
to the Agent.
(g) Survey and Title Insurance. On or prior to the Land Interest
--------------------------
Acquisition Date, the Lessee shall have delivered (i) an ALTA/ACSM (1992)(Urban)
Survey of the Property, including Table A numbers 2, 3, 4, 6, 8, 9, 10 and 11,
certified to the Lessor, the Participants and the title company, (ii) an ALTA
(1992) owners title insurance policy with extended coverage over the general
exceptions, insuring fee title in the Lessor to the Property, subject only to
the Permitted Exceptions, (iii) an ALTA (1992) Loan Policy insuring the Agent
that the Lien of the Mortgage is a first and primary Lien on the Lessor's
interest in the Lease and on the fee title to the Property, subject only to
pending disbursements for construction and the Permitted Exceptions, and (iv) an
ALTA (1992) Loan Policy insuring the Agent that the Lien of the Lease is a first
and primary Lien on the Lessee's interest in the Property; such policies each in
an amount not less than the estimated Land Interest Acquisition Cost and other
amounts funded on the Land Interest Acquisition Date with comprehensive, access,
separate tax parcel, survey identicality, variable rate, future advances, usury,
doing business, fraudulent conveyances (deletion of creditors rights exclusion),
mechanics liens, zoning and subdivision endorsements.
(h) Evidence of Recording and Filing. On or prior to the Land
--------------------------------
Interest Acquisition Date, the Agent shall have received evidence reasonably
satisfactory to it that each of the Deed, the Land Lease Supplement, the
Assignment of Lease, the Consent to Assignment, the Mortgage, the Memorandum of
Option and the Subordination Agreement have been delivered to the title company
for recording or are being recorded with the appropriate Governmental
Authorities and that the UCC Financing Statements with respect to the Property
have been delivered to the title company for filing or are being filed with the
appropriate Governmental Authorities.
(i) Evidence of Insurance. On or prior to the Land Interest
---------------------
Acquisition Date, the Agent and the Lessor shall have received certificates of
insurance with respect to the Property required to be maintained pursuant to the
Lease setting forth the respective coverages, limits of liability, carrier,
policy number and period of coverage.
(j) Preliminary Budget. On or prior to the Closing Date, the Lessor
------------------
and the Agent shall have received a copy of a preliminary budget with respect to
the Land Interest, in form reasonably satisfactory to each of them.
(k) Taxes. On or prior to the Land Interest Acquisition Date, all
-----
taxes, fees and other charges in connection with the execution, delivery,
recording, filing and registration of the Operative Documents shall have been
paid or provisions for such payment shall have been made to the satisfaction of
the Agent and the Lessor.
23
(l) Opinion of Counsel. On or prior to the Closing Date the Lessee
------------------
shall have delivered to the Agent, and the Lessor an opinion of ▇▇▇▇▇▇ Godward
LLP, counsel to the Lessee addressing the matters set forth in Exhibit F, which
---------
opinion shall be in form and substance reasonably satisfactory to the Agent and
the Lessor.
(m) Approvals. All necessary (or, in the reasonable opinion of the
---------
Lessor, the Participants or the Agent or any of their respective counsel,
advisable) Governmental Actions and consents and approvals of or by any
Governmental Authority or other Person, in each case required by any Requirement
of Law, covenant or restriction affecting the Property or the transactions
contemplated thereby, shall have been obtained or made and be in full force and
effect by the time required by any Requirement of Law.
(n) Litigation. No action or proceeding shall have been instituted,
----------
nor shall any action or proceeding be threatened, before any Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Participation Agreement, the Lease or any
other Operative Document or any transaction contemplated hereby or thereby or
(ii) which is reasonably likely to have a Material Adverse Effect.
(o) Requirements of Law. In the reasonable opinion of the Lessor, the
-------------------
Participants, the Agent and their respective counsel, 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 Lessor, the Agent or any
Participant to any adverse regulatory or tax prohibitions or constraints.
(p) reserved.
(q) Lessee's Resolutions and Incumbency Certificate, etc. On or prior
----------------------------------------------------
to the Closing Date, the Lessor, each Participant and the Agent shall each have
received (i) a certificate of the Secretary or an Assistant Secretary of the
Lessee attaching and certifying as to (A) the resolutions of the Board of
Directors of the Lessee, duly authorizing the execution, delivery and
performance by the Lessee of documents and agreements of the type represented by
each Operative Document to which it is or will be a party, (B) its certificate
or articles of incorporation and bylaws, 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 good standing certificate from the
appropriate officer of the Lessee's state of incorporation and of the state in
which the Property is located.
(r) Closing Date and Land Interest Acquisition Date. The Closing Date
-----------------------------------------------
and the Land Interest Acquisition Date shall occur on or prior to June 30, 2000.
(s) No Material Adverse Effect. As of such Funding Date, there shall
--------------------------
not have occurred any Material adverse change in the Lessee's capital structure,
ownership or consolidated assets, liabilities, results of operations, or
financial condition from that set forth or contemplated in the most recent
financial statements delivered pursuant to Section 8.3(e) or Section 10.1(a)(v),
-------------- ------------------
and no event or condition shall have occurred that would result in a Material
Adverse Effect.
24
(t) reserved.
(u) Lessor's Resolutions and Incumbency Certificate, etc. On or
----------------------------------------------------
prior to the Closing Date, the Lessee, the Agent and each Participant shall have
received a certificate of the Secretary or an Assistant Secretary of the Lessor
attaching and certifying as to (A) the resolutions of the Board of Directors
duly authorizing the execution, delivery and performance by the Lessor of
documents and agreements of the type represented by each Operative Document to
which it is or will be a party, (B) its certificate or articles 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.
(v) Legal Fees and Expenses. The Lessor shall have caused to be
-----------------------
paid and capitalized as Advances as provided in Section 9 all reasonable fees
---------
and expenses of attorneys for the Agent, the Lessor and any Participant (which
attorneys may be employees of such Person) paid or incurred in connection with
the preparation, negotiation, execution and delivery of the Operative Documents.
Each of the parties to this Participation Agreement acknowledge and agree
that the documents required by, and the conditions set forth in, this Section
-------
6.1 were executed, delivered and satisfied, as applicable, as of the Closing
---
Date. The Lessee represents and warrants that (i) each and every representation
and warranty of the Lessee contained in the Operative Documents to which it is a
party is true and correct in all material respects on and as of the date of this
Participation Agreement, (ii) no Default or Event of Default under the Lease or
the Construction Agency Agreement 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
covenants, agreements and conditions contained herein or in any Operative
Document required to be performed or complied with by it on or prior to the date
hereof. This Participation Agreement shall be executed, delivered and effective
on the date hereof upon the satisfaction of the following conditions:
(i) this Participation Agreement shall have been duly
authorized, executed and delivered by the parties hereto and shall be in
full force and effect, and the Lessor, the Agent and each Participant shall
have each received a fully executed copy hereof;
(ii) each of the other Operative Documents shall have been
amended, or amended and restated, to the extent reasonably requested by the
Agent or the Lessor in order to reflect the amendment and restatement of
the Existing Participation Agreement contemplated herein; and
(iii) the Lessee shall have caused to be paid all reasonable
fees and expenses of attorneys for the Agent, the Lessor and any
Participant (which attorneys may be employees of such Person) paid or
incurred in connection with the preparation, negotiation, execution and
delivery of this Participation Agreement.
Section 6.2 Conditions Precedent - Improvements. The obligation of the
-----------------------------------
Lessor to make an Advance to finance the acquisition of Equipment, if any, or
the construction of any
25
Improvements or the funding of any Interest Payment Advance or other capitalized
amount on any Funding Date in respect of the Improvements or any Equipment, and
the obligation of each Participant to purchase its Participation Interest in,
and to make available to the Lessor its related portion of, each such Advance on
such Funding Date are subject to the increase of the Total Commitment as
provided in Section 3.6(d) and to satisfaction or waiver of the following
conditions precedent and the conditions precedent set forth in Section 6.3 (it
-----------
being understood that the Lessor's obligation to finance such Equipment, if any,
or Improvements shall not be subject to the conditions precedent set forth in
this Section 6.2 or Section 6.3 to the extent such conditions are actions
----------- -----------
required of the Lessor) on or prior to the Improvements Closing Date, or such
Funding Date, as the case may be:
(a) Funding Request. On or prior to the Improvements Closing Date or
---------------
applicable Funding Date, the Agent and the Lessor shall have received a fully
executed counterpart of the Funding Request, appropriately completed by the
Lessee, acting as Construction Agent, in accordance with Section 3.4; provided,
----------- --------
that this condition shall be deemed to have been satisfied in connection with an
Interest Payment Advance pursuant to Section 3.7(d) hereof or any amount
--------------
capitalized pursuant to Section 3.7(e) hereof.
--------------
(b) Operative Documents. Each of the Operative Documents to be
-------------------
entered into on or prior to the Improvements Closing Date shall have been duly
authorized, executed and delivered by the parties thereto, and shall be in full
force and effect, including, without limitation, (i) this Participation
Agreement, (ii) the Lease and the Land Lease Supplement, (iii) the Improvements
Lease Supplement; (iv) the Construction Agency Agreement; (v) the Mortgage, and
(vi) the Minimum Cash Balance Collateral Agreement. No Default or Event of
Default shall exist thereunder (both before and after giving effect to the
transactions contemplated by such Funding Request), and the Lessor, the Agent
and each Participant shall each have received a fully executed copy of each of
the Operative Documents (other than the Lease, the Land Lease Supplement, the
Improvements Lease Supplement, the Mortgage, the Assignment of Lease and the
Subordination Agreement, of which the Agent shall receive the original and the
Lessor and the Participants shall receive specimens). On or prior to the
Improvements Closing Date, the Operative Documents (or memoranda thereof), any
supplements thereto and any financing statements in connection therewith
required under the Uniform Commercial Code shall have been recorded, registered
and filed, or updates to prior filings shall have been made, if necessary, in
such manner as to enable the Lessee's counsel to render its opinion referred to
in clause (l) below.
----------
(c) reserved.
(d) Appraisal. On or prior to the Improvements Closing Date, the
---------
Agent, the Lessor and the Participants shall have received an Appraisal of the
Property, which Appraisal shall show as of the projected Completion Date the
Fair Market Sales Value of the Property (which Fair Market Sales Value as of the
projected Completion Date shall not be less than the aggregate amount of the
Commitments as in effect as of the Improvements Closing Date), and meet the
other applicable requirements set forth in the definition of the term
"Appraisal" contained in Appendix 1.
----------
26
(e) Land Acquisition Closing. All conditions to the Land Interest
------------------------
Acquisition Date shall have been satisfied or waived and Lessor shall have
acquired and as of the Improvements Closing Date Lessor shall be the owner of
fee simple title to the Land Interest, subject only to Permitted Exceptions.
(f) Improvements Lease Supplement; Equipment Schedule. The Lessee and
-------------------------------------------------
the Lessor shall have delivered (i) on or prior to the Improvements Closing
Date, an original counterpart of the Improvements Lease Supplement executed by
the Lessee and the Lessor to the Agent and (ii) on or prior to the applicable
Funding Date, a duly executed Equipment Schedule covering any Equipment being
acquired with the proceeds of the related Advance by the Lessor.
(g) Title Insurance. On or prior to the Improvements Closing Date,
---------------
the Lessee shall have delivered endorsements to the title policies provided
under Section 6.1(g) increasing the amounts of such policies to be not less than
--------------
the estimated Property Cost.
(h) Evidence of Recording and Filing. On or prior to the Improvements
--------------------------------
Closing Date, the Agent shall have received evidence reasonably satisfactory to
it that the Land Lease Supplement, the Improvements Lease Supplement and the
Mortgage have been delivered to the title company for recording or is being
recorded with the appropriate Governmental Authorities.
(i) Evidence of Insurance. On or prior to the Improvements Closing
---------------------
Date, the Agent and the Lessor shall have received certificates reflecting the
builders risk insurance coverage required to be maintained pursuant to the
Lease.
(j) Construction Budget; Plans and Specifications. On or prior to the
---------------------------------------------
Improvements Closing Date, the Lessor and the Agent shall have received a copy
of the Plans and Specifications and the Budget with respect to the Land Interest
and the Improvements to be constructed thereon, each in a form reasonably
satisfactory to each of them.
(k) Taxes. On or prior to the Improvements Closing Date, all taxes,
-----
fees and other charges in connection with the execution, delivery, recording,
filing and registration of the Operative Documents shall have been paid or
provisions for such payment shall have been made to the satisfaction of the
Agent and the Lessor.
(l) Opinion of Counsel. On or prior to the Improvements Closing Date
------------------
the Lessee shall have delivered to the Agent and the Lessor a bring-down opinion
of ▇▇▇▇▇▇ Godward LLP, counsel to the Lessee, which opinion shall be in form and
substance reasonably satisfactory to the Agent and the Lessor.
(m) Approvals. All necessary (or, in the reasonable opinion of the
---------
Lessor, the Participants or the Agent or any of their respective counsel,
advisable) Governmental Actions and consents and approvals of or by any
Governmental Authority or other Person, in each case required by any Requirement
of Law, covenant or restriction affecting the Property or the transactions
contemplated thereby, shall have been obtained or made and be in full force and
effect by the time required by any Requirement of Law.
27
(n) Litigation. No action or proceeding shall have been instituted,
----------
nor shall any action or proceeding be threatened, before any Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Participation Agreement, the Lease or any
other Operative Document or any transaction contemplated hereby or thereby or
(ii) which is reasonably likely to have a Material Adverse Effect.
(o) Requirements of Law. In the reasonable opinion of the Lessor,
-------------------
the Participants, the Agent and their respective counsel, 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 Lessor, the Agent or any
Participant to any adverse regulatory or tax prohibitions or constraints.
(p) Responsible Officer's Certificate of the Lessee. On or prior to
-----------------------------------------------
the Improvements Closing Date, the Lessor, and the Agent shall each have
received a Responsible Officer's Certificate, dated as of the Improvements
Closing Date, of the Lessee stating that (i) each and every representation and
warranty of the Lessee contained in the Operative Documents to which it is a
party is true and correct in all material respects on and as of the Improvements
Closing Date; (ii) no Default or Event of Default under the Lease or the
Construction Agency Agreement 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
covenants, agreements and conditions contained herein or in any Operative
Document required to be performed or complied with by it on or prior to the
Improvements Closing Date.
(q) Improvements Closing Date. The Improvements Closing Date shall
-------------------------
occur on or prior to February 21, 2001.
(r) No Material Adverse Effect. As of each Funding Date, there shall
--------------------------
not have occurred any Material adverse change in the Lessee's capital structure,
ownership or consolidated assets, liabilities or financial condition from that
set forth or contemplated in the most recent financial statements delivered
pursuant to Section 8.3(e) or Section 10.1(a)(v), and no event or condition
-------------- ------------------
shall have occurred that would result in a Material Adverse Effect.
(s) Legal Fees and Expenses. The Lessor shall have caused to be paid
-----------------------
and capitalized as Advances as provided in Section 9 all reasonable fees and
---------
expenses of attorneys for the Agent, the Lessor and any Participant (which
attorneys may be employees of such Person) paid or incurred in connection with
the preparation, negotiation, execution and delivery of the Operative Documents.
Section 6.3 Further Conditions Precedent. The occurrence of the Closing Date
----------------------------
and the Improvements Closing Date, the obligation of the Lessor to acquire the
Land Interest on the Land Interest Acquisition Date or to make an Advance on any
Funding Date and the obligation of each Participant to purchase its
Participation Interest in, and to make available its related portion of, such
Advance on such Funding Date are subject to satisfaction or waiver of the
following conditions precedent and to satisfaction on or before the Closing
Date, the Land Interest Acquisition Date, the Improvements Closing Date or such
Funding Date, as the case may
28
be, of the following additional conditions precedent (it being understood that
Lessor's obligations to acquire the Land Interest and each Participant's
obligation to fund the portion of its Participation Interest in an Advance shall
not be subject to the conditions precedent set forth in this Section 6.3 to the
-----------
extent such conditions are actions required of the Lessor or such Participant,
as the case may be):
(a) Representations and Warranties. On such date the
------------------------------
representations and warranties of the Lessee, the Lessor and each Participant
contained herein and in each of the other Operative Documents shall be true and
correct 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) Performance of Covenants. The parties hereto shall have
------------------------
performed their respective agreements contained herein and in the other
Operative Documents to be performed by them on or prior to such date.
(c) Title. Title to the Property shall conform to the
-----
representations and warranties set forth in Section 8.4(c).
--------------
(d) No 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 acquisition of the
Property and/or the making of the Advance requested by such Funding Request, as
the case may be.
SECTION 7
COMPLETION DATE CONDITIONS
Section 7.1 Conditions to Completion Date. The occurrence of the Completion
-----------------------------
Date shall be subject to the fulfillment to the satisfaction of, or waiver by,
the Required Participants of the following conditions precedent:
(a) Construction Completion. The construction of the Improvements
-----------------------
shall have been completed substantially in accordance with the Plans and
Specifications and all Requirements of Law and Insurance Requirements, and the
Property shall be ready for occupancy and use as a corporate headquarters and
research and development and/or manufacturing facility. This shall require,
without limiting the generality of the preceding sentence, that (i) all
utilities required to adequately service the Improvements for their intended use
are available and "tapped on" and hooked up pursuant to adequate permits
(including any that may be required under applicable Environmental Laws), and
(ii) access to the Improvements for motor vehicles and, if required, pedestrians
from publicly dedicated streets and public highways is available. All fixtures,
furniture, furnishings, Equipment and other property contemplated under the
Plans and Specifications to be incorporated into or installed in the Property
shall have been incorporated or installed free and clear of all Liens except for
Permitted Exceptions.
29
(b) Architect's Certificate; Date Down Endorsement. The Lessee shall
----------------------------------------------
have furnished to the Lessor and Agent (i) a certificate of the Architect
(substantially in the form of Exhibit G) dated at or about the Completion Date
---------
and stating that (a) the Improvements have been completed substantially in
accordance with the Plans and Specifications and the Property is ready for
occupancy, (b) attached are true and complete copies of an "as built" or
"record" set of the Plans and Specifications and a plat of survey of the
Property "as built" showing all paving, driveways, fences and exterior
improvements; (ii) a date-down endorsement to or amendment and restatement of
the title insurance policies described in Section 6.1(g) and (iii) a certificate
--------------
of occupancy for the Improvements issued by the Planning Commission of Alameda
County, California.
(c) Lessee Certification. The Lessee shall have furnished the Lessor
--------------------
and the Agent with a certification of the Lessee (substantially in the form of
Exhibit H) as follows:
---------
(i) The Property , as so completed, complies in all material
respects with all Requirements of Law.
(ii) The representations and warranties of the Lessee with
respect to the Property set forth in Section 8.4(b) are true and correct in
--------------
all material respects as of the Completion 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. All amounts owing
to third parties for the construction of the Improvements and the
acquisition of any Equipment have been paid in full.
(iii) No changes or modifications were made to the related Plans
and Specifications after the Closing Date that have had a Material Adverse
Effect on the value, use or useful life of the Property.
(iv) The conditions set forth in Sections 7.1(a), (b), and (d)
--------------- --- ---
hereof have been satisfied.
(d) Insurance. The Lessee shall have obtained and there shall be in
---------
full force and effect all insurance policies (including all endorsements
thereto) required under Article XIV of the Lease in respect of the Property as
of the Completion Date and the Lessee shall have delivered to the Lessor and the
Agent certificates of insurance in form and substance satisfactory to the Lessor
and the Agent.
(e) Notice of Completion Date. Upon receipt by the Lessor and the
-------------------------
Agent of the certificates and other items required pursuant to Sections 7.1(b),
---------------
7.1(c) and 7.1(d) above and satisfaction or waiver of the other conditions set
------ ------
forth in this Section 7.1, the Lessor shall promptly deliver written notice to
-----------
the parties hereto that completion of the Improvements contemplated by the Plans
and Specifications and the Operative Documents ("Completion") has occurred with
----------
respect to the Property, and the Completion Date shall be deemed to be the date
which is three (3) Business Days following the date of such notice.
30
SECTION 8
REPRESENTATIONS
Section 8.1 Representations of the Lessor. The Lessor represents and
-----------------------------
warrants to each of the other parties hereto as follows:
(a) Due Organization, etc. It is a corporation duly organized,
---------------------
validly existing and in good standing under the laws of the State of Illinois
and has the corporate power and authority to enter into and perform its
obligations under each of the Operative Documents to which it is or will be a
party and each other agreement, instrument and document to be executed and
delivered by it in connection with or as contemplated by each such Operative
Document to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
--------------------------
performance of each Operative Document to which it is or will be a party has
been duly authorized by all necessary action on its part and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (i) does or will require any approval or consent of any trustee or
holders of any of its indebtedness or obligations, (ii) does or will contravene
any current United States or Illinois law, governmental rule or regulation,
(iii) does or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any of its property
under, its articles of incorporation or by-laws, or any indenture, mortgage,
deed of trust, conditional sales contract, credit agreement or other agreement
or instrument to which it is a party or by which it or its properties may be
bound or affected or (iv) does or will require any Governmental Action by any
Governmental Authority, except such as have been obtained on the Lessee's or the
Lessor's behalf.
(c) Enforceability, etc. Each Operative Document to which the
-------------------
Lessor is or will be a party has been, or on or before the Closing Date (or the
Land Interest Acquisition Date or Improvements Closing Date, as the case may be)
will be duly executed and delivered by the Lessor and each such Operative
Document to which the Lessor is a party constitutes, or upon execution and
delivery will constitute, a legal, valid and binding obligation enforceable
against the Lessor in accordance with the terms thereof, except as the same may
be limited by insolvency, bankruptcy, reorganization or other laws relating to
or affecting creditors' rights or by general equitable principles.
(d) Litigation. There is no action or proceeding pending or, to
----------
its knowledge, threatened to which it is a party, before any Governmental
Authority that, if adversely determined, would materially and adversely affect
its ability to perform its obligations under the Operative Documents to which it
is a party, would have a material adverse effect on the financial condition of
the Lessor or would question the validity or enforceability of any of the
Operative Documents to which it is or will become a party.
(e) Assignment. It has not assigned or transferred any of its
----------
right, title or interest in or under the Lease except to the Agent and the
Participants in accordance with this Agreement and the other Operative
Documents.
31
(f) Defaults. No default or event of default under the Operative
--------
Documents attributable to it has occurred and is continuing.
(g) Use of Proceeds. The proceeds of the purchase of the
---------------
Participation Interests shall be applied by the Lessor solely in accordance with
the provisions of the Operative Documents.
(h) Securities Act. Neither the Lessor nor any Person authorized
--------------
by the Lessor to act on its behalf has offered or sold any interest in the
Lease, or in any similar security relating to the Property, or in any security
the offering of which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering of the aforementioned securities
to, or solicited any offer to acquire any of the same from, any Person other
than the Agent and the Participants, and neither the Lessor nor any Person
authorized by the Lessor to act on its behalf will take any action which would
subject the issuance or sale of any interest in the Lease or the Property to the
provisions of Section 5 of the Securities Act or require the qualification of
any Operative Document under the Trust Indenture Act of 1939, as amended.
(i) Chief Place of Business. The Lessor's chief place of
-----------------------
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Participation
Agreement and each other Operative Document are kept are located at ▇▇� ▇▇▇▇�
▇▇▇▇▇▇� ▇▇▇▇▇▇, ▇▇▇▇▇▇�, ▇▇▇▇▇▇▇▇ ▇▇▇▇�.
(j) Federal Reserve Regulations. The Lessor is not engaged
---------------------------
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board), and no part of
the proceeds of the purchase of the Participation Interests will be used by it
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any purpose that
violates, or is inconsistent with, the provisions of Regulations T, U, or X of
the Board.
(k) Investment Company Act. The Lessor is not an "investment
----------------------
company" or a company controlled by an "investment company" within the meaning
of the Investment Company Act.
(l) No Plan Assets. The Lessor is not acquiring its interests in
--------------
the Property with the assets of any "employee benefit plan" (as defined in
Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1) of the Code).
Section 8.2 Representations of the Participants. Each Participant
-----------------------------------
represents and warrants to the Lessor, each of the other Participants and the
Lessee as follows:
(a) No Plan Assets. Such Participant is not and will not be
--------------
funding its Participation Interest hereunder, and is not performing its
obligations under the Operative Documents, with the assets of an "employee
benefit plan" (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code). The
advancing of any amount with respect to its Participation Interest on any
Funding Date shall
32
constitute an affirmation by the subject Participant of the preceding
representation and warranty as of such date.
(b) Due Organization, etc. It is either (i) a duly organized and
---------------------
validly existing corporation in good standing under the laws of the state of its
incorporation, or (ii) a national banking association duly organized and validly
existing under the laws of the United States or (iii) a banking corporation duly
organized and validly existing under the laws of the jurisdiction of its
organization, and, in each case, has the corporate power and authority to
execute, deliver and carry out the terms and provisions of the Operative
Documents to which it is a party.
(c) Authorization; No Conflict. The execution, delivery and
--------------------------
performance of each Operative Document to which it is or will be a party has
been duly authorized by all necessary action on its part and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (i) does or will require any approval or consent of any trustee or
holders of any of its indebtedness or obligations, (ii) does or will contravene
any current law, governmental rule or regulation of the United States or the
state or country of its organization, (iii) does or will contravene or result in
any breach of or constitute any default under, or result in the creation of any
Lien upon any of its property under, its certificate of incorporation or bylaws,
articles of association or other organizational documents or any indenture,
mortgage, deed of trust, conditional sales contract, credit agreement or other
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected or (iv) does or will require any Governmental Action by
any Governmental Authority.
(d) Enforceability, etc. Each Operative Document to which it is
-------------------
a party has been, or on or before the Closing Date (or the Improvements Closing
Date, as the case may be) will be, duly executed and delivered by it and each
such Operative Document to which it is a party constitutes, or upon execution
and delivery will constitute, a legal, valid and binding obligation enforceable
against it in accordance with the terms thereof, except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws relating to or
affecting creditors' rights or by general equitable principles.
(e) Litigation. There is no action or proceeding pending or, to
----------
its knowledge, threatened to which it is or will be a party before any
Governmental Authority that is reasonably likely to be adversely determined and,
if adversely determined, would materially and adversely affect its ability to
perform its obligations under the Operative Documents to which it is a party.
(f) Investment. The Participation Interest being acquired by
----------
such Participant is being acquired by such Participant for investment and not
with a view to the resale or distribution of such interest or any part thereof,
but without prejudice, however, to the right of such Participant at all times to
sell or otherwise dispose of all or any part of such interest under a
registration available under the Securities Act or under an exemption from such
registration available under the Securities Act, it being understood that the
disposition of the Participation Interest to be purchased by such Participant
shall, at all times, remain entirely within its control subject to the
provisions of Section 12 below.
33
(g) Offer of Securities, etc. Neither such Participant nor any
------------------------
Person authorized to act on its behalf has, directly or indirectly, offered to
sell its Participation Interest or any other similar securities (the sale or
offer of which would be integrated with the sale or offer of the Participation
Interest), for sale to, or solicited any offer to acquire any of the same from,
any Person.
(h) No Registration. Such Participant understands and
---------------
acknowledges that the Participation Interest has not been and will not be
registered under the Securities Act in reliance upon the exemption provided in
Section 4(2) of the Securities Act or any other applicable exemption, that
Participation Interest has not and will not be registered or qualified under the
securities or "blue sky" laws of any jurisdiction, that the Participation
Interest may be resold or otherwise transferred only if so registered or
qualified or if an exemption from registration or qualification is available,
that neither Lessee nor Lessor is required to register the Participation
Interest and that any transfer must comply with the provisions of the Operative
Documents relating thereto. Such Participant will comply with all applicable
federal and state securities laws in connection with any subsequent resale of
the Participation Interest held by it.
(i) Institutional Investor. Such Participant is a sophisticated
----------------------
institutional investor and an "accredited investor" as defined in paragraph (1),
(2), (3) or (7) of Rule 501(a) of the Securities Act, and has knowledge and
experience in financial and business matters and is capable of evaluating the
merits and risks of its investment in the Participation Interest and is able to
bear the economic risk of such investment. Such Participant has been given such
information concerning the Participation Interest, the other Operative
Documents, the Property and Lessee as it has requested.
Section 8.3 Representations of the Lessee. The Lessee represents and
-----------------------------
warrants to each of the other parties hereto that:
(a) Organization; Powers; Qualification. Each of the Lessee and
-----------------------------------
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, (b) has all requisite power
and authority to own, lease and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Operative
Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby, and (c) is qualified to do business and is in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, except in jurisdictions where the failure
to be so qualified or in good standing has not had, and could not be reasonably
expected to have, a Material Adverse Effect. Lessee's chief place of business is
located at ▇▇▇▇� ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇�, ▇▇ ▇▇▇▇�.
(b) Authorization of Operative Documents; No Conflict. The
-------------------------------------------------
execution, delivery and performance of the Operative Documents have been duly
authorized by all necessary action on the part of the Lessee. The execution,
delivery and performance by the Lessee of the Operative Documents to which it is
a party and the consummation of the transactions contemplated by the Operative
Documents do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Lessee, any of the certificate
or articles of incorporation or bylaws of the Lessee, or any order, judgment or
decree of any court or other agency of government binding on the Lessee or the
Property; (ii) conflict
34
with, result in a breach or acceleration of or entitle any other Person to
accelerate (with due notice or lapse of time or both) or constitute (with due
notice or lapse of time or both) a default under any indenture, loan agreement,
other agreement for borrowed money or other material agreement or contractual
arrangement by which the Lessee or any of its property or assets may be subject;
(iii) result in or require the creation or imposition of any Lien (or the
obligation to create or impose any Lien upon any of the properties or assets of
the Lessee (other than any Liens created under any of the Operative Documents
and other than Permitted Liens); or (iv) require any approval of stockholders or
any approval or consent of any Person under any indenture, loan agreement, other
agreement for borrowed money or other material agreement or contractual
arrangement by which the Lessee or any of its property or assets may be subject,
except for such approvals or consents which will be obtained on or before the
Closing Date and disclosed in writing to the Lessor and the Agent.
(c) Governmental Consents. The execution, delivery and
---------------------
performance by the Lessee of the Operative Documents to which it is a party and
the consummation of the transactions contemplated by the Operative Documents do
not and will not require any Governmental Action by any Governmental Authority
except for filings and recordings of the Operative Documents listed in Section
-------
8.4(f) hereof with the appropriate Governmental Authorities, all of which will
------
have been completed on or prior to, or will in due course be completed
following, the Land Interest Acquisition Date or the Improvements Closing Date,
as the case may be.
(d) Binding Obligation. Each Operative Document to which the
------------------
Lessee is a party has been duly executed and delivered by the Lessee and is the
legally valid and binding obligation of the Lessee, enforceable against the
Lessee in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
(e) Historical Financial Statements. The Historical Financial
-------------------------------
Statements (i) are in accordance with the books and records of Lessee and its
Subsidiaries, which have been maintained in accordance with good business
practice; (ii) were prepared in conformity with GAAP; and (iii) fairly present
the financial position, on a consolidated basis, of the Persons and businesses
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows, on a consolidated basis, of the
entities described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and normal year-end adjustments. Neither Lessee nor any of its Subsidiaries has
any contingent liability, any liability for taxes, or any other outstanding
obligation that is not reflected in the Historical Financial Statements or the
notes thereto and which in any such case is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Lessee and its Subsidiaries taken as a whole.
(f) No Material Adverse Effect. Since December 31, 1999, no
--------------------------
event or change has occurred that has caused or evidences, either in any case or
in the aggregate, a Material Adverse Effect.
35
(g) Litigation; Adverse Proceedings. There are no Adverse
-------------------------------
Proceedings pending or, to the knowledge of the Lessee, threatened individually
or in the aggregate, that (i) seek to enjoin, either directly or indirectly, the
execution, delivery or performance by the Lessee of the Operative Documents or
the transactions contemplated hereby or thereby, or question the validity of the
Operative Documents or the rights or remedies of the Lessor, the Agent or the
Participants with respect to the Lessee or the Property under the Operative
Documents or (ii) could reasonably be expected to have a Material Adverse
Effect. Neither the Lessee nor any of its Subsidiaries (a) is in violation of or
in default with respect to (i) any applicable laws (including Environmental
Laws) or (ii) any indenture, loan agreement, or other agreement for borrowed
money or other agreement or contractual agreement by which Lessee or any of its
property or assets may be subject (nor is there any waiver in effect which, if
not in effect, would result in such a violation or default) that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, or (b) is subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(h) Payment of Taxes. All federal and all material state and
----------------
local tax returns and reports of the Lessee and its Subsidiaries required to be
filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon the Lessee and its Subsidiaries and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. The Lessee knows of no material proposed
tax assessment against the Lessee or any of its Subsidiaries which is not being
actively contested by the Lessee or such Subsidiary in good faith and by
appropriate proceedings; provided, such reserves or other appropriate
--------
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor, and provided further that, in the case of the
-------- -------
Property, any such contest shall be subject to the terms of the Lease.
(i) Title to Properties. The Lessee and its Subsidiaries own and
-------------------
have good and marketable title to, or a valid leasehold interest in, all their
respective properties and assets reflected in the Historical Financial
Statements and in the most recent financial statements delivered pursuant to
Section 10.1, and all respective assets and properties acquired by the Lessee
------------
and its Subsidiaries since such dates, in each case except for assets and
properties disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted hereunder, and except for
assets the failure to have such title with respect to which, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Except as permitted by this Agreement, all such properties and assets
are free and clear of Liens other than Permitted Liens. Each of the Lessee and
its Subsidiaries has complied with all obligations under all material leases to
which it is a party and all such leases are in full force and effect. Each of
the Lessee and its Subsidiaries enjoys peaceful and undisturbed possession under
such leases.
36
(j) Environmental Matters.
---------------------
(i) The Property does not contain, and to Lessee's
knowledge has not previously contained, any Materials of Environmental
Concern in amounts or concentrations which (A) constitute or constituted a
violation of, or (B) could reasonably be expected to give rise to liability
under, any Environmental Law.
(ii) The Property complies, and to Lessee's knowledge has
in the last three years been in compliance, in all material respects with
all applicable Environmental Laws, and there is no contamination at (or, to
the knowledge of the Lessee, under or about) the Property or any
Environmental Law with respect to the Property.
(iii) Neither the Lessee nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to the Property, nor does
the Lessee have knowledge or reason to believe that any such notice will be
received or is being threatened.
(iv) Materials of Environmental Concern have not been
transported or disposed of from the Property in violation of, or in a
manner or to a location which could reasonably be expected to give rise to
liability under, any Environmental Law, nor have any materials of
Environmental Concern been generated, treated, stored or disposed of at, on
or under any of the Property in violation of, or in a manner that could
reasonably be expected to give rise to liability under, any applicable
Environmental Law.
(v) There are no judicial proceedings or governmental or
administrative actions pending or, to the best knowledge of the Lessee,
threatened, under any Environmental Law to which the Lessee or any of its
Subsidiaries is or will be named as a party with respect to the Property
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or any administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Property.
(vi) There has been no release or threat of release of
Materials of Environmental Concern at or from the Property, or arising
from or related to the operations of the Lessee or any Subsidiary in
connection with the Property or in violation of or in amounts or in a
manner that could reasonably give rise to liability under Environmental
Laws.
(k) No Defaults. Neither the Lessee nor any of its Subsidiaries
-----------
is in violation of or in default with respect to (i) any provision of any
Applicable Law or (ii) in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any indenture, mortgage,
deed of trust, conditional sale contract, credit agreement or other material
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected. No condition exists that, with the giving of notice or
the lapse of time or both, could constitute such a violation or default, except
where the consequences, direct or indirect, of such default or defaults, if any,
could not reasonably be expected to have a Material Adverse Effect.
37
(l) Governmental Regulation. The Lessee is not subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940,
any state public utilities code or under any other federal or state statute or
regulation which may limit its ability to incur Indebtedness or which may
otherwise render all or any portion of the obligations of the Lessee to the
Lessor, the Agent or the Participants under the Operative Documents
unenforceable.
(m) Employee Benefit Plans.
----------------------
(i) Based on the latest valuation of each Employee
Benefit Plan that either the Lessee or any ERISA Affiliate maintains or
contributes to, or has any obligation under (which occurred within twelve
months of the date of this representation), the aggregate benefit
liabilities of such plan within the meaning of Section 4001 of ERISA did
not exceed the aggregate value of the assets of such plan. Neither the
Lessee nor any ERISA Affiliate has any liability with respect to any post-
retirement benefit under any Employee Benefit Plan which is a welfare plan
(as defined in Section 3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I(B) of ERISA, which
liability for health plan coverage is not reasonably likely to have a
Material Adverse Effect.
(ii) Each Employee Benefit Plan complies, in both form and
operation, in all material respects, with its terms, ERISA and the Code,
and no condition exists or event has occurred with respect to any such pan
which would result in the incurrence by either the Lessee or any ERISA
Affiliate of any material liability, fine or penalty. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of the Lessee or
any ERISA Affiliate is legally valid and binding and in full force and
effect. No Employee Benefit Plan is being audited or investigated by any
governmental authority or is subject to any pending or threatened claim or
suit. Neither the Lessee nor any ERISA Affiliate nor any fiduciary of any
Employee Benefit Plan has engaged in a prohibited transaction under Section
406 of ERISA or section 4975 of the Code.
(iii) Neither the Lessee nor any ERISA Affiliate
contributes to or has any material contingent obligations to any
Multiemployer Plan. Neither the Lessee 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 Lessee 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.
(n) Licenses, Permits, etc. The Lessee and its Subsidiaries own
----------------------
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names or rights thereto, that
individually or in the aggregate, are material, without known conflict with the
rights of others. To the best knowledge of Lessee, no product of the Lessee or
any its Subsidiaries infringes in any material respect on any license, permit
franchise, authorization, patent, copyright, service ▇▇▇▇, trademark, trade name
or other right owned by
38
any other Person. To the best knowledge of the Lessee, there is no material
violation by any Person of any right of the Lessee or any of its Subsidiaries
with respect to any patent, copyright, service ▇▇▇▇, trademark, trade name or
other right owned or used by the Lessee or any of its Subsidiaries.
(o) Subsidiaries. Schedule III identifies each Subsidiary, the
------------ ------------
jurisdiction of its incorporation, the percentage of issued and outstanding
shares of each class of its capital stock owned by the Lessee and its
Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and the number of shares of each class issued and
outstanding. Such shares owned by the Lessee and its Subsidiaries are owned
beneficially, and of record, free of any Lien.
(p) Offer of Securities, etc. Neither the Lessee nor any Person
------------------------
authorized to act on its behalf has, directly or indirectly, offered or will
offer any interest in the Property or the Lease or any other interest similar
thereto (the sale or offer of which would be integrated with the sale or offer
of such interest in the Property or the Lease), for sale to, or solicited or
will solicit any offer to acquire any of the same from, any Person other than
the Agent or Participants, the Lessor and other "accredited investors" (as
defined in Regulation D of the Securities and Exchange Commission).
(q) Disclosure. The representations or warranties of the Lessee
----------
and its Subsidiaries contained in any Operative Document and in any other
document, certificate or written statement furnished to the Lessor, the Agent
and/or the Participants by or on behalf of the Lessee for use in connection with
the transactions contemplated hereby, when taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact (known to
the Lessee, in the case of any document not furnished by the Lessee) necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances in which the same were made. There are no facts known
(or which should upon the reasonable exercise of diligence be known) to the
Lessee (other than matters of a general economic nature) that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect and that have not been disclosed herein or in such other documents,
certificates and statements furnished to the Lessor, the Agent and/or the
Participants for use in connection with the transactions contemplated hereby.
Section 8.4 Representations of the Lessee With Respect to the Property.
----------------------------------------------------------
The Lessee hereby represents and warrants to each of the other parties hereto,
on the Closing Date, on the Improvements Closing Date and on each other date on
which representations and warranties of the Lessee are made or deemed made
pursuant to the Operative Documents, as follows:
(a) Representations. The representations and warranties of the
---------------
Construction Agent and the Lessee set forth in the Operative Documents to which
it is a party are true and correct in 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. The Construction Agent and the Lessee are in
compliance with their respective obligations under the Operative Documents and
there exists no Default or Event of Default.
39
(b) Property. The Property consists of the Land Interest on
--------
which corporate headquarters research and development and/or manufacturing
facilities will be constructed pursuant to the Construction Agency Agreement.
The Property is located in Fremont, California. The Property as improved in
accordance with the Plans and Specifications and the use thereof by the Lessee
and its agents, assignees, employees, invitees, lessees, licensees, contractors
and tenants will comply in all material respects with all Requirements of Law
(including, without limitation, Title III of the Americans with Disabilities
Act, all zoning and land use laws, all Environmental Laws and all building,
planning, zoning and fire codes), except for such Requirements of Law as the
Lessee shall be contesting in good faith by appropriate proceedings and in
accordance with the applicable provisions of the Lease, and will comply with all
Insurance Requirements. The Plans and Specifications have been or will be
prepared in all material respects in accordance with applicable Requirements of
Law (including, without limitation, Title III of the Americans with Disabilities
Act, all zoning and land use laws, all Environmental Laws and all building,
planning, zoning and fire codes) and upon completion of the facilities in
accordance with the Plans and Specifications, such facilities and the other
Improvements on such Property will not encroach in any manner onto any adjoining
land (except as permitted by express written easements or as insured by
appropriate title insurance). Upon completion of the Improvements in accordance
with the related Plans and Specifications, the Improvements including, without
limitation, structural members, the plumbing, heating, air conditioning and
electrical systems thereof, and all water, sewer, electric, gas, telephone and
drainage facilities, will be completed in a workmanlike manner and in accordance
with the Plans and Specifications and will be fit for use as Class A facilities
to the extent used for Lessee's headquarters offices and otherwise as research
and development and/or manufacturing facilities, and all other utilities
required to adequately service the Improvements for their intended use are or
will be available and "tapped on" and hooked up pursuant to adequate permits
(including any that may be required under applicable Environmental Laws). There
is no action, suit or proceeding (including any proceeding in condemnation or
eminent domain or under any Environmental Law) pending or, to the best of the
Lessee's knowledge, threatened with respect to the Lessee, its Affiliates or the
Property which materially adversely affects the title to, or the use, operation
or value of, the Property. Except as may be disclosed to the Lessor and the
Agent in writing in accordance with Section 15.1(c) of the Lease, no fire or
other casualty with respect to the Property has occurred. The Property has
available (or will have available by the Completion Date) all material services
of public facilities and other utilities necessary for use and operation of such
facilities and the other Improvements for their primary intended purposes,
including, without limitation, adequate water, gas and electrical supply, storm
and sanitary sewerage facilities, telephone, other required public utilities and
means of access to such facilities from publicly dedicated streets and public
highways for pedestrians and motor vehicles. All utilities serving the Property,
or proposed to serve the Property in accordance with the Plans and
Specifications, are (or will be) located in, and vehicular access to the
Improvements on the Property is provided by, either public rights-of-way
abutting such Property or Appurtenant Rights. All material licenses, approvals,
authorizations, consents, permits (including, without limitation, building, and
environmental permits, licenses, approvals, authorizations and consents),
easements and rights-of-way, including proof and dedication, required for (x)
the use, treatment, storage, transport, disposal or disposition of any Hazardous
Substance on, at, under or from the Property during the construction of the
Improvements thereon, and (y) construction of such Improvements in accordance
with the Plans and Specifications and the Construction
40
Agency Agreement, have either been obtained from the appropriate Governmental
Authorities having jurisdiction or from private parties, as the case may be, or
will be obtained from the appropriate Governmental Authorities having
jurisdiction or from private parties, as the case may be, prior to commencing
any such construction or use and operation, as applicable, and will in each case
be maintained by the Lessee during the periods for which they are required by
Applicable Law or such Governmental Authorities.
(c) Title. The Deed providing for the acquisition of the Property is
-----
sufficient to convey title to the Property in fee simple, subject only to
Permitted Exceptions. Upon conveyance of the Deed on the Land Interest
Acquisition Date, the Lessor will own fee simple title in the Land Interest and
any Improvements and will have the right to grant the Mortgage on the Property.
The Lessor will at all times during the Term after the Improvements Closing Date
have good title to all Equipment, if any.
(d) Insurance. The Lessee has obtained insurance coverage covering
---------
the Property which meets the requirements of Article XIV of the Lease, and such
coverage is in full force and effect.
(e) Lease. (i) Upon the execution and delivery of the Lease
-----
Supplements to the Lease, the Lessee will have unconditionally accepted the
Property and will be bound by the terms of the Lease Supplements and, upon the
Lease Commencement Date will have a valid leasehold interest in the Property,
subject only to the Permitted Exceptions; (ii) from and after the Lease
Commencement Date, the Lessee's obligation to pay Rent will be an independent
covenant and no right of deduction or offset will exist with respect to any Rent
or other sums payable under the Lease; and (iii) from and after the Lease
Commencement Date, no Rent under the Lease will have been prepaid and the Lessee
will have no right to prepay the Rent, except as specifically set forth therein
or in the Construction Agency Agreement.
(f) Protection of Interests. (i) On the Land Interest Acquisition
-----------------------
Date (or with respect to the Improvements Lease Supplement and each other
Operative Document required to be amended and/or amended and restated upon
execution of this Agreement, on the Improvements Closing Date), the Land Lease
Supplement, the Improvements Lease Supplement, the Assignment of Lease, the
Consent to Assignment, the Mortgage, the Memorandum of Option and the
Subordination Agreement are each in a form sufficient, and have been or will be
recorded with the Alameda County Recorder's Office, which is the only recording
office necessary to grant perfected first priority liens on the applicable
portion of the Property covered thereby to the Agent or the Lessor, as the case
may be, (ii) the Agent Financing Statements are each in a form sufficient, and
have been delivered to the title company for filing or will be filed with the
Secretary of State of the State of California and the Alameda County Recorder's
Office, which are all filing offices necessary to create a valid and perfected
first priority security interest in the Lessor's interest in all Equipment, if
any, to be located on the Property and the Improvements; and (iii) the Lessor
Financing Statements are each in a form sufficient, and have been delivered to
the title company for filing or will be filed with the Secretary of State of the
State of California and the Alameda County Recorder's Office, which are all
filing offices necessary to perfect the Lessor's interest under the Lease to the
extent the Lease is a security agreement.
41
(g) Flood Hazard Areas. No portion of the Property is located in an
------------------
area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, or if any portion of the Property
is located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, then flood insurance has
been obtained for the Property or such portion thereof in accordance with
Section 14.3 of the Lease and in accordance with the National Flood Insurance
Act of 1968, as amended.
(h) Conditions Precedent. All conditions precedent on the part of the
--------------------
Lessee or the Construction Agent contained in this Agreement and in the other
Operative Documents relating to the acquisition and, upon Completion, leasing of
the applicable portion of the Property by the Lessor have been satisfied in
full.
Section 8.5 Representations of the Lessee With Respect to Each Advance.
----------------------------------------------------------
The Lessee hereby represents and warrants as of each Funding Date on which an
Advance is made as follows:
(a) Representations. The representations and warranties of the
---------------
Construction Agent and the Lessee set forth in the Operative Documents to which
it is a party (including the representations and warranties set forth in
Sections 8.3 and 8.4) are 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 Construction Agent and the Lessee are in compliance in
all material respects with their respective obligations under the Operative
Documents, and there exists no Default or Event of Default. No Default or Event
of Default will occur as a result of, or after giving effect to, the Advance
requested by the Acquisition Request or the Funding Request on such date.
(b) Improvements. With respect to any Funding Date to finance
------------
Property Improvement Costs after the Land Interest Acquisition Date,
construction of the Improvements prior to such Funding Date has been performed
in a good and workmanlike manner, substantially in accordance with the Budget
and the Plans and Specifications and in compliance in all material respects with
all Requirements of Law and in compliance with all Insurance Requirements.
(c) No Liens. There are no Liens against the Property other than
--------
Permitted Exceptions. The Participation Interests funding such Advance are
secured by the Lien of the Mortgage.
(d) Advance. The amount of the Advance requested represents amounts
-------
owing in respect of the acquisition price of the Land Interest or amounts that
the Construction Agent reasonably believes will be due in the sixty (60) days
following such Advance from the Construction Agent to third parties in respect
of Property Improvements Costs, or amounts paid by the Construction Agent to
third parties in respect of Property Costs for which the Construction Agent has
not previously been reimbursed by an Advance. The conditions precedent on the
part of the Lessee and the Construction Agent to such Advance and the related
remittances by the Participants with respect thereto set forth in Section 6 have
---------
been satisfied.
42
(e) Acceptance and Lease of Equipment. Upon the execution and
---------------------------------
delivery of each Equipment Schedule to the Lease, if any, the Lessee will have
unconditionally accepted the Equipment, if any, subject to the Lease Supplements
and from and after the Lease Commencement Date, will have good and marketable
title to a valid and subsisting leasehold interest in such Equipment, subject
only to Permitted Exceptions.
(f) Protection of Interests in Equipment. On each Funding Date for
------------------------------------
the acquisition of Equipment, if any, (i) the Lease, the Lease Supplements, the
applicable Equipment Schedule and the Mortgage are each in a form sufficient to
grant perfected Liens on the Lessee's and the Lessor's interests, respectively,
in the Equipment to the Lessor and Agent, respectively, (ii) the Agent Financing
Statements are each in a form sufficient, and have been or will be filed with
the Secretary of State of the State of California and the Alameda County
Recorder's Office, which are all filing offices necessary to perfect a valid
first priority security interest in such interest in such Equipment, and (iii)
the Lessor Financing Statements are each in a form sufficient, and have been or
will be filed with the Secretary of State of the State of California and the
Alameda County Recorder's Office, which are all filing offices necessary to
perfect a valid first priority security interest in such Equipment under the
Lease to the extent the Lease is a security agreement.
(g) Title Insurance Date Down Endorsement. Prior to each Advance for
-------------------------------------
Property Improvements Costs, the Lessee shall furnish the Lessor an endorsement
from the title insurance company issuing the policies pursuant to Section 6.1,
-----------
insuring the Lessor and the Agent that (i) all mechanics' or similar liens and
claims for such liens which could arise from that part of the Property
Improvements Costs previously paid for, if any, or to be paid for with the then
proposed Advance, have been waived and (ii) there has not been filed with
respect to all or any parts of the Land Interest and Improvements any mechanics'
or similar liens or claims of such liens that are not discharged of record, or
insured over by the title insurance company, in respect of any part of the Land
Interest and Improvements.
(h) Insurance. The Lessee has obtained insurance coverage covering
---------
the Property which meets the requirements of Article XIV of the Lease, and such
coverage is in full force and effect.
SECTION 9
PAYMENT OF CERTAIN EXPENSES
The Lessee agrees, for the benefit of the Lessor, the Agent and the
Participants, that:
Section 9.1 Transaction Expenses. At all times from and after the
--------------------
Closing Date, the Lessee shall pay from time to time all (i) Transaction
Expenses of the Lessee in respect of the transactions consummated on the Closing
Date, the Land Interest Acquisition Date, the Improvements Closing Date or any
Funding Date, and (ii) all Transaction Expenses arising out of or resulting from
a Fully Indemnifiable Event or an Environmental Obligation; provided, however,
43
(a) With respect to the Improvements only, prior to the Completion
Date, (i) the Lessee shall pay from time to time all Transaction Expenses
arising from an event or circumstance Within the Lessee's Control, provided that
--------
if such Transaction Expense is related to an inability or failure to complete
construction of the Improvements, the Lessee's monetary obligation provided in
this clause (b)(i), together with all other similarly limited amounts payable
-------------
prior to the Completion Date under clause (b)(i) of Section 9.3, clause 5(A)(2)
------------- ----------- --------------
of the proviso to Section 13.1, Section 13.10, clause (i)(B) of the proviso to
------------ -------------
Section 24.1 of the Lease and any similarly limited payment obligation of the
Lessee in connection with the return or sale of the Lessor's interest in the
Property under the Lease or the Construction Agency Agreement, shall not exceed
the maximum Improvements Residual Value Guarantee Amount unless such Transaction
Expense also arises out of or results from a Fully Indemnifiable Event or an
Environmental Obligation, in which case such limitation shall not be applicable,
and (ii) all other Transaction Expenses shall be capitalized as provided in
Section 3.7(e) and paid as Advances funded by related fundings of Participation
--------------
Interests on the date of payment; and
(b) After the Completion Date, Lessee shall pay or cause to be paid
all Transaction Expenses.
Section 9.2 Brokers' Fees and Stamp Taxes. The Lessee shall pay or cause
-----------------------------
to be paid any brokers' fees and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Participation
Agreement and the other Operative Documents.
Section 9.3 Obligations.
-----------
(a) At all times from and after the Closing Date, the Lessee
shall pay, on or before the due date thereof, all costs, expenses and other
amounts required to be paid by the Mortgage and the Assignment of Lease other
than the principal amount or equity component of, or interest or yield on, the
Advances, to the extent such costs, expenses or other amounts arise out of or
result from a Fully Indemnifiable Event or an Environmental Obligation.
(b) With respect to the Improvements only, prior to the
Completion Date, (i) the Lessee shall pay from time to time all costs, expenses
and other amounts required to be paid pursuant to the Mortgage and the
Assignment of Lease arising from an event or circumstance Within the Lessee's
Control, provided that if such costs, expenses or other amounts become payable
--------
due to an inability or failure to complete construction of the Improvements, the
Lessee's monetary obligation provided in this clause (b)(i), together with all
-------------
other similarly limited amounts payable prior to the Completion Date under
clause (b) of Section 9.1, clause 5(A)(2) of the proviso to Section 13.1,
----------- ----------- -------------- ------------
Section 13.10, clause (i)(B) of the proviso to Section 24.1 of the Lease and any
-------------
similarly limited payment obligation of the Lessee in connection with the return
or sale of the Lessor's interest in the Property under the Lease or the
Construction Agency Agreement, shall not exceed the maximum Land Interest
Residual Value Guarantee Amount and Improvements Residual Value Guarantee Amount
unless such cost, expense or other amount also arises out of or results from a
Fully Indemnifiable Event or an Environmental Obligation, in which case such
limitation shall not be applicable, and (ii) all other such costs, expenses or
other amounts shall be capitalized as provided in Section 3.7(e) and paid as
--------------
Advances funded by related fundings of Participation Interests on the date of
payment.
44
(c) From and after the Completion Date, the Lessee shall pay from
time to time all costs, expenses and other amounts required to be paid pursuant
to the Mortgage and the Assignment of Lease, howsoever arising.
SECTION 10
OTHER COVENANTS AND AGREEMENTS
Section 10.1 Covenants of the Lessee.
-----------------------
(a) Affirmative Covenants. The Lessee hereby agrees that, so
----------------------
long as this Agreement is in effect or any amount is owing to any Participant,
the Lessor or the Agent hereunder or under any other Operative Document, the
Lessee shall and (except in the case of delivery of financial information,
reports, and notices) shall cause each of its Subsidiaries to perform each of
the following covenants:
(i) General Business Operations. Each of the Lessee and
---------------------------
its Subsidiaries shall (i) preserve and maintain its corporate existence,
(ii) preserve and maintain all of its rights, privileges and franchises
reasonably necessary to the conduct of its business unless the failure to
do so is not reasonably likely to have a Material Adverse Effect, and (iii)
conduct its business activities in compliance with all applicable laws and
governmental rules and regulations, and all indentures, loan agreements or
other agreements for borrowed money or other material agreements or
contractual arrangements applicable to such entity or its property or
assets, the violation of which is reasonably likely to have a Material
Adverse Effect; provided, however, that the Lessee and its Subsidiaries may
-------- -------
dissolve or liquidate any of its Subsidiaries if such dissolution or
liquidation is not reasonably likely to have a Material Adverse Effect. The
Lessee shall maintain its chief executive office and principal place of
business in the United States and shall not relocate its chief executive
office of principal place of business outside of California except upon not
less than thirty (30) days prior written notice to the Agent.
(ii) Maintenance of Properties. Subject, in the case of the
-------------------------
Property, to the provisions of the Lease and of Section 8.5 hereof, the
------------
Lessee will, and will cause each of its Subsidiaries to, maintain or cause
to be maintained in good repair, working order and condition, ordinary wear
and tear excepted, all property necessary in the business of the Lessee and
its Subsidiaries.
(iii) Payment of Taxes and Claims. Subject, in the case of
---------------------------
the Property, to the provisions of the Lease and of Section 8.5 hereof, the
-----------
Lessee will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have
become due and payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided, no such charge or claim
need be paid if it is being contested in good faith by
45
appropriate proceedings promptly instituted and diligently conducted and
for which appropriate reserves as required by GAAP are maintained. The
Lessee will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than the Lessee or any of its Subsidiaries).
(iv) Insurance. Subject, in the case of the Property, to the
---------
provisions of the Lease, the Lessee will maintain or cause to be
maintained, with financially sound and reputable insurers, such public
liability insurance, third party property damage insurance, business
interruption insurance and casualty insurance with respect to liabilities,
losses or damage in respect of the assets, properties and businesses of the
Lessee and its Subsidiaries as may customarily be carried or maintained
under similar circumstances by Persons of established reputation engaged in
similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise
on such terms and conditions as shall be customary for such Persons. The
Lessee will upon request of the Agent, the Lessor or any Participant
furnish to the Agent, the Lessor or such Participant a summary setting
forth the nature and extent of the insurance maintained pursuant to this
Section 10.1(a)(iv).
-------------------
(v) Financial Statements and Other Reports. The Lessee will
--------------------------------------
deliver or cause to be delivered to the Agent (with sufficient copies for
each of the Participants) and to the Lessor:
(A) as soon as available and in any event within
forty-five (45) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, the consolidated balance sheet of the
Lessee and its Subsidiaries, and the unconsolidated balance sheet of
the Lessee, in each case as at the end of such Fiscal Quarter and the
related consolidated statements of income, stockholders' equity and
cash flows of the Lessee and its Subsidiaries and related
unconsolidated statement of income, stockholders' equity and cash flow
of the Lessee, in each case for such Fiscal Quarter and for the period
from the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year, all in reasonable detail, together with a Financial
Officer Certification with respect thereto;
(B) as soon as available and in any event within ninety
(90) days after the end of each Fiscal Year, (i) the consolidated
balance sheet of the Lessee and its Subsidiaries and related
unconsolidated statement of income, stockholders' equity and cash flow
of the Lessee, in each case as at the end of such Fiscal Year and the
related unconsolidated statements of income, stockholders' equity and
cash flows of the Lessee and its Subsidiaries for such Fiscal Year in
reasonable detail, together with a Financial Officer Certification
with respect thereto; and (ii) a report, with respect to such
consolidated financial statements of the Lessee and its Subsidiaries,
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent certified public
accountants of recognized national standing selected by the Lessee,
together with a written statement by such independent certified public
accountants stating (1) that their audit examination has included a
review
46
of the terms of the Operative Documents, (2) whether, in connection
therewith, any condition or event that constitutes a Default or an
Event of Default has come to their attention and, if such a condition
or event has come to their attention, specifying the nature and period
of existence thereof, and (3) that nothing has come to their attention
that causes them to believe either or both that the information
contained in any Compliance Certificate is not correct or that the
matters set forth in such Compliance Certificate are not stated in
accordance with the terms hereof;
(C) together with each delivery of financial statements of
the Lessee and its Subsidiaries pursuant to Sections 10.1(a)(v)(A) and
----------------------
10.1(a)(v)(B), a duly executed and completed Compliance Certificate;
-------------
(D) if, as a result of any change in accounting principles
and policies from those used in the preparation of the Historical
Financial Statements, the consolidated financial statements of the
Lessee and its Subsidiaries or the unconsolidated financial statements
of the Lessee delivered pursuant to Sections 10.1(a)(v)(A),
----------------------
10.1(a)(v)(B) or Section 10.1(a)(v)(I) will differ in any material
------------- ---------------------
respect from the consolidated or unconsolidated financial statements
as applicable, that would have been delivered pursuant to such
Sections had no such change in accounting principles and policies been
made, then together with the first delivery of such financial
statements after such change a statement of reconciliation for all
such prior financial statements in form and substance satisfactory to
the Required Participants;
(E) promptly upon their becoming available, copies of (i)
all financial statements, reports, notices and proxy statements sent
or made available generally by the Lessee to its Security holders
acting in such capacity or by any Subsidiary of the Lessee to its
Security holders other than the Lessee or another Subsidiary of the
Lessee, (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by the Lessee or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory
authority, and (iii) all press releases and other statements made
available generally by the Lessee or any of its Subsidiaries to the
public concerning material developments in the business of the Lessee
or any of its Subsidiaries;
(F) promptly upon any officer of the Lessee obtaining
knowledge (i) of any condition or event that constitutes a Default or
an Event of Default or that notice has been given to the Lessee by the
Lessor, the Agent or any Participant with respect thereto; (ii) that
any Person has given any notice to the Lessee or any of its
Subsidiaries or taken any other action with respect to any event or
condition set forth in Section 17.1(e) of the Lease; (iii) if Lessee
is not a reporting company for purposes of the Exchange Act, of any
condition or event of a type which would otherwise be required to be
disclosed in a current report on Form 8-K of the Securities and
Exchange Commission (excluding Item 3 as in effect on the date hereof)
if Lessee were such a reporting company; or (iv) of the
47
occurrence of any event or change that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect, a
certificate of a Responsible Officer specifying the nature and period
of existence of such condition, event or change, or specifying the
notice given or action taken by any such Person, as applicable, and
the nature of such claimed Event of Default, Default, default, event
or condition, and what action the Lessee has taken, is taking and
proposes to take, as applicable, with respect thereto;
(G) promptly upon any officer of the Lessee obtaining
knowledge of the institution of, or non-frivolous threat of, any
Adverse Proceeding not previously disclosed in writing by the Lessee
to the Lessor, the Agent and the Participants either (i) involving
potential monetary damages payable by Lessee or its Subsidiaries of
$2,500,000 or more (alone or in the aggregate), or (ii) seeking to
enjoin or otherwise prevent the consummation or performance of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated by the Operative Documents, written notice thereof
together with such other information as may be reasonably available to
the Lessee to enable the Lessor, the Agent and the Participants and
their counsel to evaluate such matters including information from time
to time of any material development in any such Adverse Proceeding;
(H) (i) promptly upon becoming aware of the occurrence of
any ERISA Event, a written notice specifying the nature thereof, what
action the Lessee, any of its Subsidiaries or any of their respective
ERISA Affiliates has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto; and (ii) upon request of the Agent and with
reasonable promptness, copies of (1) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the
Lessee, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each
Pension Plan; (2) all notices received by the Lessee, any of its
Subsidiaries or any of their respective ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies
of such other documents or governmental reports or filings relating to
any Employee Benefit Plan as the Agent shall reasonably request;
(I) as soon as practicable and in any event no later than
ten (10) days before the beginning of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year (a "Financial Plan"),
--------------
including a forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of the Lessee and its
Subsidiaries for such Fiscal Year, together with pro forma Compliance
Certificates for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based;
(J) promptly, written notice of any change in either
▇▇▇▇�'� or S&P's rating, if any, for Lessee's long term Indebtedness;
and
48
(K) the Lessee and its Subsidiaries shall at all times keep
proper books of record and account in which full, true and correct
entries will be made of their transactions in accordance with GAAP.
(L) with reasonable promptness, such other instruments,
agreements, certificates, opinions, statements, documents and other
information and data with respect to the operations or condition
(financial or otherwise) of Lessee or any of its Subsidiaries and
compliance by Lessee with the terms of this Agreement and the other
Operative Documents as from time to time may be reasonably requested
by the Lessor, the Agent or any Participant.
(vi) Inspection Rights. Subject, in the case of the Property, to
-----------------
the requirements of the Lease, the Lessee will, and will cause each of its
Subsidiaries to, permit any authorized representatives designated by the
Lessor, the Agent or any Participant to visit and inspect any of the
properties of the Lessee or of any of its Subsidiaries, to inspect its and
their financial and accounting records, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants (provided, the Lessee may, if it so chooses, be present
at or participate in any such discussion), all upon reasonable notice to
the chief financial officer, treasurer or the vice president of finance of
the Lessee and at such reasonable times during normal business hours and as
often as may reasonably be requested; provided, the Participants shall use
--------
their reasonable efforts to coordinate with the Lessor and the Agent in
order to minimize the number of such inspections and discussions which
shall in no event occur more than once each quarter if no Event of Default
has occurred and is continuing. The Lessee will, upon the request of the
Lessor, the Agent or the Required Participants, participate in a meeting of
the Lessor, the Agent and the Participants once during each Fiscal Year to
be held at the Lessee's corporate offices (or at such other location as may
be agreed to by the Lessee and the Agent) at such time as may be agreed to
by the Lessee and the Agent.
(vii) Environmental.
-------------
(A) Environmental Disclosure. The Lessee will deliver to
------------------------
the Lessor and the Agent:
(1) as soon as practicable following the Lessee's or
any of its Subsidiaries' receipt thereof, copies of all
environmental audits, investigations, analyses and reports with
respect to any material environmental matter at any facility or
property of the Lessee or any of its Subsidiaries or with respect
to any Environmental Claim arising after the Closing Date at any
such facility or property which matter or Environmental Claim
(other than in the case of the Property) could reasonably be
expected to have a Material Adverse Effect;
(2) promptly upon the Lessee or any of its
Subsidiaries becoming aware of the occurrence thereof, written
notice describing in reasonable detail (1) any Release required
to be reported to any federal,
49
state or local governmental or regulatory agency under any
applicable Environmental Laws, and (2) any remedial action taken
by the Lessee or any other Person in response to (x) any
Hazardous Materials Activities the existence of which could be
reasonably be expected to result in one or more Environmental
Claims that (other than in the case of the Property) could
reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, or (y) any Environmental Claims that
(other than in the case of the Property), individually or in the
aggregate, have a reasonable possibility of resulting in a
Material Adverse Effect;
(3) as soon as practicable following the sending or
receipt thereof by the Lessee or any of its Subsidiaries, a copy
of any and all material written communications with any third
party with respect to (1) any Environmental Claims that (other
than in the case of the Property), individually or in the
aggregate, have a reasonable possibility of giving rise to a
Material Adverse Effect, (2) any Release required to be reported
to any federal, state or local governmental or regulatory agency,
and (3) any request for information from any Governmental
Authority that suggests such Governmental Authority is
investigating whether the Lessee or any of its Subsidiaries may
be potentially responsible for any Hazardous Materials Activity;
(4) prompt written notice describing in reasonable
detail (1) any proposed acquisition of stock, assets, or property
by the Lessee or any of its Subsidiaries that could reasonably be
expected to (A) expose the Lessee or any of its Subsidiaries to,
or result in, Environmental Claims that could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect or (B) affect the ability of the Lessee or any of
its Subsidiaries to maintain in full force and effect all
material Governmental Actions required under any Environmental
Laws for their respective operations and (2) any proposed action
to be taken by the Lessee or any of its Subsidiaries to modify
current operations in a manner that could reasonably be expected
to subject the Lessee or any of its Subsidiaries to any
additional material obligations or requirements under any
Environmental Laws; and
(5) with reasonable promptness, such other documents
and information as from time to time may be reasonably requested
by the Lessor or the Agent in relation to any matters disclosed
pursuant to this Section 10.1(a)(vii).
--------------------
(B) Hazardous Materials Activities, Etc. The Lessee shall
-----------------------------------
promptly take, and shall cause each of its Subsidiaries promptly to
take, any and all actions necessary to (i) cure any violation of
applicable Environmental Laws by the Lessee or such Subsidiaries that
(other than in the case of the Property) could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect,
and (ii) make an appropriate response to any Environmental
50
Claim against the Lessee or such Subsidiaries and discharge any
obligations it may have to any Person thereunder where (other than in
the case of the Property) failure to do so could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
(C) Prior to the commencement of construction on the
Property, the Lessee shall have (i) confirmed or negated the presence
of the burrowing owl on the Property for purposes of complying with
necessary relocation of such burrowing owls during their nesting
season, or other mitigative measures deemed necessary during
construction, and (ii) properly abandoned or closed all agricultural
▇▇▇▇� present on the Property in accordance with all regulatory agency
requirements.
(D) The Lessee shall determine, pursuant to established
federal and state criteria, and prior to the removal of topsoil from
the Property, whether any soil to be removed exhibits the
characteristics of, or would otherwise be classified as, a hazardous
waste, and, if such soil is determined to be hazardous, the Lessee
shall comply with all applicable federal and state requirements
regarding the management of such hazardous waste.
(viii) Compliance with Laws. The Lessee will comply, and shall
--------------------
cause each of its Subsidiaries and all other Persons, if any, on or
occupying any facilities or properties of the Lessee or any or its
subsidiaries to comply, with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Authority (including all
Environmental Laws), noncompliance with which could (other than in the case
of the Property) reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(ix) Payment of Obligations. Lessee and its Subsidiaries shall
----------------------
pay, discharge or otherwise satisfy at or before maturity in accordance
with customary terms or before they become delinquent, as the case may be,
all of its material obligations of whatever nature and all of its
obligations under the Operative Documents, except (other than with respect
to the Operative Documents and subject, in the case of the Property, to the
terms of the Lease) where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in
conformity with GAAP in respect thereto have been provided on the books of
the Lessee or its Subsidiaries, as the case may be.
(b) Negative Covenants. The Lessee hereby agrees that, so long as
------------------
this Agreement remains in effect or any amount is owing to any Participant, the
Lessor or the Agent hereunder or under any other Operative Document, the Lessee
shall, and shall cause each of its Subsidiaries to comply with each of the
following covenants:
(i) Indebtedness. The Lessee shall not nor shall it permit any
------------
of its Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness, except:
51
(A) Indebtedness of the Lessee and its Subsidiaries
arising from the endorsement of instruments for collection in the
ordinary course of the Lessee's or a Subsidiary's business;
(B) Indebtedness of the Lessee and its Subsidiaries
for trade accounts payable, provided that (i) such accounts arise in
the ordinary course of business and (ii) no material part of any such
account is more than ninety (90) days past due (unless subject to a
bona fide dispute and for which adequate reserves as required by GAAP
have been established);
(C) Indebtedness owed to any Person providing worker's
compensation, health, disability or other employee benefits or
property, casualty or liability insurance to the Lessee or any
Subsidiary thereof, or which may be deemed to exist pursuant to
reimbursement or indemnification obligations to such Person;
(D) Indebtedness of the Lessee and its Subsidiaries
with respect to performance, surety, statutory, appeal or similar
obligations incurred in the ordinary course of business;
(E) Indebtedness in respect of netting services,
overdraft protections and otherwise in connection with Deposit
Accounts;
(F) Guaranties by the Lessee of Indebtedness of its
Subsidiaries or guaranties by a Subsidiary of the Lessee of
Indebtedness of the Lessee or another Subsidiary with respect, in each
case, to Indebtedness otherwise permitted to be incurred pursuant to
this Section 10.1(b)(i);
------------------
(G) Indebtedness described in Schedule 10.1(b)(i),
-------------------
but not any extensions, renewals or replacements of such Indebtedness
except (i) renewals and extensions expressly provided for in the
agreements evidencing any such Indebtedness as the same are in effect
on the date of this Agreement and (ii) refinancings and extensions of
any such Indebtedness if the terms thereof are no less favorable to
the obligor thereon or to the Participants than the Indebtedness being
refinanced or extended and the average life to maturity thereof is
greater than or equal to that of the Indebtedness being refinanced or
extended; provided, such Indebtedness permitted under clause (i) or
-------- ----------
clause (ii) above shall not be (1) Indebtedness of an obligor that was
-----------
not an obligor with respect to the Indebtedness being extended,
renewed or refinanced, (2) in a principal amount which exceeds the
Indebtedness being renewed, extended or refinanced or (3) incurred,
created or assumed if any Default or Event of Default has occurred and
is continuing or would result therefrom;
(H) Indebtedness with respect to Capital Leases in an
aggregate amount not to exceed at any time $30,000,000 with respect to
the Lessee and all of its Subsidiaries in the aggregate;
52
(I) Purchase money Indebtedness in an aggregate amount
not to exceed at any time $10,000,000 with respect to the Lessee and
all of its Subsidiaries in the aggregate; provided, any such
--------
Indebtedness (i) shall be recourse only to the asset acquired in
connection with the incurrence of such Indebtedness, (ii) such
Indebtedness is incurred by such Person at the time of, or not later
than ninety (90) days after, the acquisition by such Person of the
property so financed, (iii) such Indebtedness does not exceed the
purchase price of the property so financed, and (c) no Default or
Event of Default has occurred and is continuing at the time the
Indebtedness is incurred or will occur after giving effect to such
Indebtedness;
(J) The obligations of the Lessee to the Lessor, the
Agent and the Participants under the Operative Documents, to the
extent they are deemed to constitute Indebtedness.
(K) Indebtedness consisting of Indebtedness of the
Lessee which is subordinated to the obligations of the Lessee under
the Operative Documents in right of payment, exercise of remedies or
both, and incurred after the Closing Date.
(L) Indebtedness of a Subsidiary acquired pursuant to
Section 10.1(b)(iv) hereof provided that such Indebtedness existed at
the time of the acquisition and was not incurred in contemplation
thereof.
(M) Other Indebtedness of the Lessee and its
Subsidiaries, provided that the aggregate principal amount of all such
other Indebtedness does not exceed $30,000,000 at any time.
(ii) Liens. The Lessee shall not, nor shall it permit any of
-----
its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of the Lessee or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit
the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the UCC of any state or under any similar recording
or notice statute, except: (A) Permitted Exceptions, in the case of the
Property, (B) Permitted Liens described in clauses (a), (b), (c) or (l) of
the definition of such term, in the case of the Minimum Cash Balance
Collateral and the Minimum Cash Balance Account, and (C) Permitted Liens,
in all other cases.
(iii) Dividends, Redemptions, Etc. Neither the Lessee nor
---------------------------
any of its Subsidiaries shall pay any dividends or make any distributions
on its Equity Securities; purchase, redeem, retire, defease or otherwise
acquire for value any of its Equity Securities; return any capital to any
holder of its Equity Securities as such; make any distributions of assets,
Equity Securities, obligations or securities to any holder of its Equity
Securities as such; or set apart any sum for any such purpose; except as
follows:
53
(A) either the Lessee or any of its Subsidiaries may
pay dividends on its capital stock payable solely in such Person's own
capital stock;
(B) any Subsidiary of the Lessee may pay dividends to
the Lessee;
(C) the Lessee may purchase shares of its capital
stock for its employee stock option plans, provided that (A) the
aggregate amount of such purchases does not exceed $15,000,000 in any
Fiscal Year, and (B) no Default has occurred and is continuing at the
time of such purchase or will occur after giving effect to such
purchase; and
(D) the Lessee may purchase shares of its capital
stock with the proceeds received by it from a substantially concurrent
issue of new shares of its capital stock.
(iv) Investments. Neither the Lessee nor any of its
-----------
Subsidiaries shall directly or indirectly make any Investment except for
Investments in the following:
(A) Investments of Lessee and its Subsidiaries in Cash
Equivalents;
(B) Any transaction permitted by Section 10.1(b)(i);
------------------
(C) 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;
(D) Investments listed on Schedule 10.1(b)(iv)(D)
-----------------------
existing on the date of this Agreement;
(E) Investments permitted by the investment policy of
Lessee set forth in Schedule 10.1(b)(iv)(E) or, if any changes to the
-----------------------
investment policy of Lessee are hereafter duly approved by the Board
of Directors of Lessee, in any subsequent investment policy which is
the most recent investment policy delivered by Lessee to Agent with a
certificate of Lessee's chief financial officer to the effect that
such investment policy has been duly approved by Lessee's Board of
Directors and is then in effect; and
(F) Other Investments in an aggregate amount not to
exceed at any time more than ten percent (10%) of Lessee's Tangible
Net Worth.
(v) Fundamental Changes; Disposition of Assets;
-------------------------------------------
Acquisitions. The Lessee shall not, and shall not permit any of its
------------
Subsidiaries to, alter the corporate, capital or legal structure of the
Lessee or any of its Subsidiaries if any such alteration could reasonably
be expected to have a Material Adverse Effect, or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease
or sub-lease (as lessor or sublessor), transfer or
54
otherwise dispose of, in one transaction or a series of transactions, all
or any part of its business, property or assets, whether now owned or
hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person or any division or
line of business of any Person, except:
(A) Any Domestic Subsidiary of the Lessee may be
merged into Lessee or with or into any Wholly-Owned Domestic
Subsidiary, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a
series of transactions, to Lessee or any Wholly-Owned Domestic
Subsidiary; provided in the case of such a merger, Lessee or such
--------
Wholly-Owned Domestic Subsidiary shall be the continuing or surviving
persons;
(B) Any Foreign Subsidiary of the Lessee may be merged
into the Lessee or with or into any Wholly-Owned Foreign Subsidiary,
or be liquidated, wound up or dissolved, or all or any part of its
business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series
of transactions, to the Lessee or any Wholly-Owned Foreign Subsidiary;
provided, in the case of such a merger, the Lessee or such Wholly-
--------
Owned Foreign Subsidiary shall be the continuing or surviving
corporation;
(C) Asyst Japan, Inc. may be merged into MECS
Corporation;
(D) Sales or other dispositions of Investments
permitted by subparts (A) and (C) of Section 10.1(b)(iv) for not less
------------ --- -------------------
than fair value;
(E) Sales of inventory by the Lessee and its
Subsidiaries in the ordinary course of their businesses;
(F) Sales of surplus, damaged, worn or obsolete
equipment or inventory for not less than fair market value;
(G) Sales or assignments of defaulted receivables to a
collection agency in the ordinary course of business;
(H) Licenses to other Persons of intellectual property
by the Lessee or any Subsidiary thereof in the ordinary course of
business provided that, in each case, the terms of the transaction,
--------
taken as a whole, are terms which then would prevail in the market for
similar transactions between unaffiliated parties dealing at arm's
length;
(I) Sales or other dispositions of assets and property
by the Lessee to any of the Lessee's Subsidiaries or by any of the
Lessee's Subsidiaries to the Lessee or any of its other Subsidiaries,
provided that the terms of any such sales or other dispositions by or
to the Lessee are terms which are no less
55
favorable to the Lessee than would prevail in the market for similar
transactions between unaffiliated parties dealing at arm's length;
(J) Transactions permitted under Section 10.1(b)(iv);
-------------------
(K) Sales of accounts receivable of the Lessee and its
Subsidiaries, provided that (A) each such sale is (1) on fair and
reasonable terms and (2) for cash, and (B) the aggregate book value of
all such accounts receivable so sold in any consecutive four quarter
period does not exceed twenty percent (20%) of the consolidated total
accounts receivable of the Lessee and its Subsidiaries on the last day
immediately preceding such four quarter period;
(L) Acquisitions by purchase or otherwise of all or
substantially all of the business, property or fixed assets of, or
stock or other beneficial ownership of, any Person or any division or
line of business of any Person provided that such acquisition is paid
for with cash or capital stock of Lessee or any of its Subsidiaries
and provided further that such acquisitions do not exceed at any time
more than twenty percent (20%) of the total assets of Lessee and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP; and
(M) Other sales, leases, transfers and disposal of
assets and property for not less than fair market value, provided that
the aggregate book value of all such assets and property so sold,
leased, transferred or otherwise disposed of in any consecutive four
quarter period does not exceed ten percent (10%) of the Consolidated
Assets of the Lessee and its Subsidiaries on the last day immediately
preceding such four quarter period;
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 Operative Documents.
(vi) Accounting Changes. Neither the Lessee nor any of its
------------------
Subsidiaries shall change (i) its Fiscal Year (currently April 1 through
March 31) or (ii) its accounting practices except as permitted by GAAP.
(vii) Transactions with Affiliates. Neither the Lessee nor
----------------------------
any of its Subsidiaries shall enter into any Contractual Obligations with
any Affiliate thereof or engage in any other transaction with any Affiliate
thereof except upon terms at least as favorable to the Lessee or such
Subsidiary as an arms-length transaction with unaffiliated Persons.
(viii) Change in Business. Neither the Lessee nor any of its
------------------
Subsidiaries shall engage, either directly or indirectly through Affiliates
thereof, in any material line of business other than the business conducted
by such Persons as of the Closing Date and other businesses incidental or
reasonably related thereto.
56
(ix) ERISA. Neither the Lessee nor any ERISA Affiliate shall
-----
(A) adopt or institute any Employee Benefit Plan that is an employee
pension benefit plan within the meaning of Section 3(2) of ERISA, (B) take
any action which will result in the partial or complete withdrawal, within
the meanings of Section 4203 and 4205 of ERISA, from a Multiemployer Plan,
(C) engage or permit any Person to engage in any transaction prohibited by
Section 406 of ERISA or Section 4975 of the Code involving any Employee
Benefit Plan or Multiemployer Plan which would subject either the Lessee or
any ERISA Affiliate to any tax, penalty or other liability including a
liability to indemnify, (D) incur or allow to exist any accumulated funding
deficiency (within the meaning of Section 412 of the Code or Section 302 of
ERISA), (E) fail to make full payment when due of all amounts due as
contributions to any Employee Benefit Plan or Multiemployer Plan, (F) fail
to comply with the requirements of Section 4980B of the Code or Part 6 of
Title I(B) of ERISA, or (G) adopt any amendment to any Employee Benefit
Plan which would require the posting of security pursuant to Section
401(a)(29) of the Code, which singly or cumulatively, would have a Material
Adverse Effect.
Section 10.2 The Lessee's Financial Covenants. So long as this Agreement
--------------------------------
remains in effect or any amount is owing to any Participant, the Lessor or the
Agent hereunder or under any other Operative Document, the Lessee will comply
and will cause compliance, on a consolidated basis with the following financial
covenants:
(a) Funded Indebtedness/Capital Ratio. The Lessee shall not
---------------------------------
permit its Funded Indebtedness/Capital Ratio to be greater than 0.50 to 1.00.
(b) Quick Ratio. The Lessee shall not permit its Quick Ratio to
-----------
be less than 1.25 to 1.00.
(c) Debt Service Coverage Ratio. The Lessee shall not permit its
---------------------------
Debt Service Coverage Ratio for any Fiscal Quarter to be less than 5.0 to 1.0,
provided that in calculating such ratio for each fiscal quarter ending on or
prior to December 31, 2000, Lessee's Adjusted Net Income will be determined on a
rolling annualized basis.
(d) Tangible Net Worth. The Lessee shall not permit its Tangible
------------------
Net Worth on the last day of any Fiscal Quarter (such date to be referred to
herein as a "determination date") to be less than the sum on such determination
date of the following:
(i) Ninety percent (90%) of the Tangible Net Worth of the
Lessee and its Subsidiaries as of March 31, 2000 (the "base date");
---------
plus
----
(ii) Seventy-five percent (75%) of the sum of the Lessee's
consolidated quarterly net income (ignoring any quarterly losses) for each
Fiscal Quarter after the base date through and including the Fiscal Quarter
ending on the determination date;
57
plus
----
(iii) One hundred percent (100%) of all Net Proceeds of
Equity Securities issued by the Lessee and its Subsidiaries (to Persons
other than the Lessee or its Subsidiaries) during the period commencing on
the base date and ending on the determination date;
plus
----
(iv) One hundred percent (100%) of the principal amount of all
debt securities of the Lessee and its Subsidiaries converted into Equity
Securities of the Lessee and its Subsidiaries during the period commencing
on the base date and ending on the determination date.
(e) Minimum Cash Balance. On the Improvements Closing Date, the
--------------------
Lessee shall establish, and shall at all times thereafter during the Term
maintain, an account with LaSalle Bank N.A. (the "Minimum Cash Balance Account")
----------------------------
into which the Lessee shall deposit (A) during the Construction Period,
Qualified Securities (as defined in the Minimum Cash Balance Collateral
Agreement) and (B) following the Construction Period, cash and/or Qualified
Securities, in either case in an aggregate amount equal to (i) $50,000,000 on
the Improvements Closing Date, and (ii) an additional $2,500,000 on the last day
of the Fiscal Quarter ending March 31, 2001 and the last day of each Fiscal
Quarter thereafter, until the aggregate amount so deposited in the Minimum Cash
Balance Account reaches $100,000,000 as of the last day of the Fiscal Quarter
ending December 31, 2005 (and the Required Cash Balance Amount as of any date of
determination shall be as set forth on Schedule 10.2(e) hereto). Notwithstanding
----------------
anything contained to the contrary in the Operative Documents, in no event shall
the Lessee create, permit or suffer to exist any Liens on the Minimum Cash
Balance Collateral or the Minimum Cash Balance Account other than those in favor
of the Agent, for the benefit of the Participants, in accordance with the terms
hereof. On the Improvements Closing Date, the Lessee shall execute and deliver a
Minimum Cash Balance Collateral Agreement in the form of Exhibit P hereto (the
---------
"Minimum Cash Balance Collateral Agreement") pursuant to which, inter alia, at
----------------------------------------- ----- ----
the earlier of (x) the date which is thirty (30) days following the occurrence
of any Lease Event of Default, or (y) December 30, 2005, the Lessee shall grant
a first priority perfected security interest in, and Lien on, the Minimum Cash
Balance Account and the Minimum Cash Balance Collateral in favor of the Agent,
for the benefit of the Participants. The Lessee shall not be permitted to
withdraw any amounts on deposit in the Minimum Cash Balance Account at any time
during the Term other than as permitted in the Minimum Cash Balance Collateral
Agreement.
(f) Net Losses. The Lessee and its Subsidiaries on a consolidated
----------
basis shall not incur a net loss (as determined in accordance with GAAP) in (i)
any two (2) consecutive Fiscal Quarters, or (ii) any Fiscal Year.
Section 10.3 Cooperation with the Lessee. The Lessor, the Participants
---------------------------
and the Agent shall, to the extent reasonably requested by the Lessee (but
without assuming additional liabilities, duties or other obligations on account
thereof), at the Lessee's expense, cooperate with the Lessee in connection with
its covenants contained herein including, without limitation, at any
58
time and from time to time, upon the request of the Lessee, to promptly and duly
execute and deliver any and all such further instruments, documents and
financing statements (and continuation statements related thereto) as the Lessee
may reasonably request in order to perform such covenants.
Section 10.4 Covenants of the Lessor. The Lessor hereby agrees that so
-----------------------
long as this Participation Agreement is in effect:
(a) Discharge of Liens. The Lessor will not create or permit to
------------------
exist at any time, and will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Property attributable to it; provided, however, that the
-------- -------
Lessor shall not be required to so discharge any such Lessor Lien while the same
is being contested in good faith by appropriate proceedings diligently
prosecuted so long as such proceedings shall not involve any material danger of
impairment of the Liens of the Lease or the Security Documents or of the sale,
forfeiture or loss of, and shall not interfere with the use or disposition of,
the Property or title thereto or any interest therein or the payment of Rent;
provided, further, that in the event the Lessee purchases the Property the
-------- -------
Lessor shall discharge all such Lessor Liens on or prior to the date on which
the purchase is effective under the Lease.
(b) Change of Chief Place of Business. The Lessor shall give
---------------------------------
prompt notice to the Lessee and the Agent if the Lessor's chief place of
business or chief executive office, or the office where the records concerning
the accounts or contract rights relating to the Property are kept, shall cease
to be located at ▇▇� ▇▇▇▇� ▇▇▇▇▇▇� ▇▇▇▇▇▇, ▇▇▇▇▇▇�, ▇▇▇▇▇▇▇▇ ▇▇▇▇�, or if it
shall change its name, identity or corporate structure.
SECTION 11
AMENDMENTS; ACTIONS ON DEFAULT;
RELATIONSHIP OF LESSOR AND PARTICIPANTS
Section 11.1 Amendments. Subject to the other provisions of this Section
---------- -------
11, no Operative Document nor any of the terms thereof may be terminated,
--
amended, supplemented, waived or modified with respect to the Lessee, the
Lessor, the Agent or any Participant, except (a) in the case of a termination,
amendment, supplement, waiver or modification to be binding on the Lessee, the
Lessor or the Agent, with the written agreement or consent of such party, (b)
prior to the occurrence and continuation of a Lease Event of Default, the
Lessee's consent shall be required to amend or modify any Operative Document to
which it is not a party, and (c) in the case of a termination, amendment,
supplement, waiver or modification to be binding on the Participants, with the
written agreement or consent of the Required Participants; provided, however,
that
(a) no such termination, amendment, supplement, waiver or
modification shall without written agreement or consent of each Participant:
59
(i) modify any of the provisions of this Section 11,
----------
change the definition of "Required Participants" or modify or waive any
---------------------
provision of an Operative Document requiring action by the foregoing;
(ii) amend, modify, waive or supplement any of the
provisions of Sections 3.6, 3.7 or 3.10 - 3.20 of this Participation
--------------------------------
Agreement or the representations of such Participant in Section 8 or the
---------
covenants in Section 7 of this Participation Agreement;
---------
(iii) reduce, modify, amend or waive any fees or
indemnities in favor of any Participant, including without limitation
amounts payable pursuant to Section 13 (except that any Person may consent
----------
to any reduction, modification, amendment or waiver of any indemnity
payable to it);
(iv) modify, postpone, reduce or forgive, in whole or in
part, any payment of Rent (other than pursuant to the terms of any
Operative Document), any payment in respect of its Participation Interest,
or any payment of any Asset Termination Value, Commitment Fee, any Residual
Value Guarantee Amount, amounts due pursuant to Section 22.2 of the Lease,
or interest or yield or, subject to clause (iii) above, any other amount
------------
payable under the Lease or this Participation Agreement, or modify the
definition or method of calculation of Rent (other than pursuant to the
terms of any Operative Document), Participation Interest, Land Asset
Termination Value, Improvements Asset Termination Value, Lease Balance,
Commitment Fee, Shortfall Amount, Land Interest Residual Value Guarantee
Amount, Improvements Residual Value Guarantee Amount, Property Improvements
Cost, Participant Balance, Tranche A Participant Balance, Tranche B
Participant Balance, Tranche C Participant Balance or any other definition
which would affect the amounts to be advanced or which are payable under
the Operative Documents;
(v) consent to any assignment of the Lease (other than
pursuant to the terms thereof), releasing the Lessee from its obligations
in respect of the payments of Rent and any Asset Termination Value or
changing the absolute and unconditional character of such obligation;
(vi) except as authorized by the Operative Documents,
release the Lessor's interest in all or a substantial part of the Property
or in any of the Minimum Cash Balance Collateral or the Minimum Cash
Balance Account; or
(vii) increase the amount of the Commitment of such
Participant; and
(b) no other termination, amendment, supplement, waiver or
modification shall, without the written agreement or consent of the Lessor and
the Required Participants, be made to the Lease or Section 6 of this
---------
Participation Agreement or the definition of "Event of Default".
----------------
60
Section 11.2 Forbearance, Execution of Waivers and Amendments by the
-------------------------------------------------------
Lessor; Actions on Default.
--------------------------
(a) The Lessor shall have the right to forebear from exercising
rights against the Lessee to the extent the Lessor shall determine in good faith
that such forbearance is appropriate and is permitted by this Section 11. Upon
----------
the direction of the Required Participants, the Lessor shall execute any waiver,
modification or amendment of the Lease or the Construction Agency Agreement
requested by the Lessee; provided, that: (i) the waiver, modification or
--------
amendment is not prohibited by the provisions of this Section 11, (ii) the
----------
waiver, modification or amendment does not (A) increase the amount the Lessor
may be required to pay to the Lessee or anyone else, or (B) reduce or postpone
(and cannot reasonably be expected to reduce or postpone) any payments that the
Lessor would, but for such modification or amendment, be expected to receive, or
(C) release the Lessor's interest in the Minimum Cash Balance Collateral or the
Minimum Cash Balance Account or in all or a substantial part of the Property;
and (iii) the Lessor is not excused from executing the waiver, modification or
amendment by Section 11.4.
------------
(b) The Lessor will, with reasonable promptness, provide each
Participant with copies of all default notices it sends or receives under the
Lease or the Construction Agency Agreement and notify each Participant of any
Event of Default under the Lease or the Construction Agency Agreement of which
it is aware and of any other matters which, in the Lessor's reasonable judgment,
are likely to materially affect the payments each Participant will be required
to make or be entitled to receive under this Agreement, but the Lessor will not
in any event be liable to any Participant for the Lessor's failure to do so
unless such failure constitutes gross negligence or willful misconduct on the
part of the Lessor.
(c) Before taking possession of the Property or exercising
foreclosure or offset rights against the Property or filing any lawsuit against
the Lessee because of any breach by the Lessee of the Operative Documents or if
requested in writing by any Participant at any time when an Event of Default has
occurred and is continuing, the Lessor shall promptly call a meeting with each
Participant and the Agent to discuss what, if anything, the Lessor should do.
Such meeting shall be scheduled during regular business hours in the offices of
the Agent, or another appropriate location in Chicago, Illinois not earlier than
five (5) and not later than twenty (20) Business Days after the Lessor's receipt
of the written request from a Participant. If the Required Participants shall
direct the Lessor in writing to (a) send any default notices required before a
Default can become an Event of Default, or (b) bring a lawsuit against the
Lessee to enforce the Operative Documents when an Event of Default has occurred
and is continuing, then the Lessor shall send the notice or bring the suit, and
the Lessor shall prosecute any such suit with reasonable diligence using
reputable counsel. However, if the Agent is not a member of the Required
Participants voting pursuant to this Section 11.2(c) in favor of the giving of
---------------
any such notice or the bringing of any such suit, then the Lessor may require
that it first receive the written agreement (in form reasonably acceptable to
the Lessor) of the members of the Required Participants so voting to indemnify
the Agent and the Lessor from and against all costs, liabilities and claims that
may be incurred by or asserted against the Lessor because of the action the
Required Participants direct the Agent or the Lessor to take. In no event shall
any Participant instigate any suit or other action directly against the Lessee
with respect to the Operative
61
Documents or the Property, even if such Participant would, but for this
agreement, be entitled to do so as a third party beneficiary or otherwise under
the Operative Documents.
(d) In the event the Lessee or its designee fails to purchase the
Property after any exercise of its Purchase Option or Expiration Date Purchase
Obligation or following the occurrence and continuance of an Event of Default,
the Lessor shall, if the Required Participants shall agree in writing, bring
suit against the Lessee to enforce the Operative Documents in such form as shall
be recommended by reputable counsel, and thereafter the Lessor shall prosecute
the suit with reasonable diligence in accordance with the advice of reputable
counsel. If, after the occurrence and continuance of an Event of Default, the
Lessor acquires the interests of the Lessee in any of the Property as a result
of such suit or otherwise (unless the Lessor acquires such interests through a
Voluntary Retention of the Property and pays to each Participant (other than
Lessor) all amounts payable to such Participant hereunder, including, without
limitation, such Participant's Participation Interest in all amounts payable by
the Lessee on the Designated Payment Date and any Shortfall Amount), the Lessor
shall thereafter proceed with reasonable diligence to sell the Property in a
commercially reasonable manner to one or more bona fide third party purchasers
and shall in any event endeavor to consummate the sale of the entire Property
(through a single sale of the entire Property or a series of sales of parts)
within five (5) years following the date the Lessor recovers possession of the
Property at the best price or prices the Lessor believes are reasonably
attainable within such time. Further, after the Designated Payment Date and
prior to the Lessor's sale of the entire Property, the Lessor shall retain a
property management company experienced in the area where the Property is
located to manage the operation of the Property and pursue the leasing of any
completed Improvements which are part of the Property. The Lessor shall not
retain an Affiliate of the Lessor to act as the property manager except under a
bona fide, arms-length management contract containing commercially reasonable
terms. Further, after the Designated Payment Date and until the Lessor sells the
Property, the Lessor shall (i) endeavor in good faith to maintain, or shall
obtain the agreement of one or more of such tenants to maintain, the Property in
good order and repair, (ii) procure and maintain casualty insurance against
risks customarily insured against by owners of comparable properties, in amounts
sufficient to eliminate the effects of coinsurance, (iii) keep and allow each
Participant to review accurate books and records covering the operation of the
Property, and (iv) pay prior to delinquency all taxes and assessments lawfully
levied against the Property.
(e) Notwithstanding the foregoing, Defaulting Participants shall
have no voting or consent rights under this Section 11.2 and no rights to
------------
require the Lessor to call a meeting pursuant to Section 11.2(d) until they
---------------
cease to be Defaulting Participants. During any period that any Defaulting
Participants have no voting rights under this Section 11.2, only the Commitment
------------
Percentages of the other Participants that still have voting rights will be
considered for purposes of determining the Required Participants.
Section 11.3 Actions by Lessor Generally. Subject to the limitations set
---------------------------
forth in Section 11.2 and the provisions of Section 11.11:
------------ -----
(a) The Lessor shall have the exclusive right to take any action
and to exercise any available powers, rights and remedies to enforce the
obligations of the Lessee under the Operative Documents, or to refrain from
taking any such action or exercising any such power, right or remedy.
62
(b) The Lessor shall be entitled to (i) give any consent, waiver
or approval requested by the Lessee with respect to any construction or other
approval contemplated in the Lease or the Construction Agency Agreement or (ii)
waive or consent to any adverse title claims affecting the Property, provided
--------
that, in either case, such action will not have a material adverse effect on the
Lessee's obligations or ability to make the payments required under the
Operative Documents, the Lessor's rights and remedies under the Operative
Documents or any Participant's rights hereunder.
Section 11.4 Conflicts. Notwithstanding anything to the contrary herein
---------
contained, the Lessor shall be entitled, even over the objection of each
Participant or the Required Participants, (i) to take any action required of the
Lessor by, or to refrain from taking any action prohibited by, the Operative
Documents or any law, rule or regulation to which the Lessor is subject
(provided, that this Section shall not be construed to authorize the Lessor to
--------
take any action required by a modification of the Operative Documents prohibited
by Section 11.2), and (ii) after notice to the Participants, to bring and
------------
prosecute a suit against the Lessee in the form recommended by and in accordance
with advice of reputable counsel at any time when a breach of the Operative
Documents by the Lessee shall have put the Lessor (or any of its officers or
employees) at risk of criminal prosecution or significant liability to third
parties or at any time after the Lessee or its designee fails to purchase the
Property on the Designated Payment Date. Nothing herein contained shall be
construed to require the Lessor to agree to modify the Operative Documents or to
take any action or refrain from taking any action in any manner that could
increase the Lessor's liability to the Lessee or others, that could reduce or
postpone payments to which the Lessor is entitled thereunder, or that could
reduce the scope and coverage of the indemnities provided for the Lessor's
benefit therein.
Section 11.5 Refusal to Give Consents or Fund. If any Participant
--------------------------------
declines to consent to any amendment, modification, waiver, release or consent
for which such Participant's consent is requested or required by reason of this
Agreement, or if any Participant fails to pay any amount owed by it hereunder,
the Lessor shall have the right, but not the obligation and without limiting any
other remedy of the Lessor, to terminate such Participant's rights to receive
any further payments under Section 3 of this Agreement by paying such
---------
Participant a termination fee equal to the total of:
(i) all amounts actually advanced by such Participant to the
Lessor under Section 3.4 hereof before the termination; excluding,
-----------
however, any such amounts that were repaid to such Participant before the
termination by actual payments made to such Participant by the Lessor of,
or the Lessor's offset against, sums representing:
(A) Such Participant's Commitment Percentage (as then in
effect) times any payments of Rent received by the Lessor under the
Lease; plus
(B) Such Participant's Commitment Percentage (as then in
effect) times any sales proceeds or proceeds of any casualty or
condemnation or any payments of Asset Termination Value received by
the Lessor under the Lease; and
63
(ii) Such Participant's Commitment Percentage (as then in
effect), times:
(A) the then accrued but unpaid Basic Rent or, during the
Construction Period, accrued but unpaid interest or yield, and
Commitment Fees due hereunder; plus
(B) interest on past due amounts described in the
preceding clause (A) computed at the Federal Funds Effective Rate;
plus
(C) interest on any amounts (other than interest itself)
past due from the Lessee or its designees under the Operative
Documents, computed at the Federal Funds Effective Rate.
Section 11.6 Required Repayments. Each Participant shall repay to the
-------------------
Lessor, upon written request or demand by the Lessor (i) any sums paid by the
Lessor to such Participant under this Agreement from, or that were computed by
reference to, any Rent or other amounts which the Lessor shall be required to
return or pay over to another party, whether pursuant to any bankruptcy or
insolvency law or proceeding or otherwise and (ii) any interest or other amount
that the Lessor is also required to pay to another party with respect to such
sums. Such repayment by any Participant shall not constitute a release of such
Participant's right to receive such Participant's Commitment Percentage (as then
in effect) times the amount of any such Rent or any such other amount (or any
interest thereon) that the Lessor may later recover.
Section 11.7 Indemnification. Each Participant agrees to indemnify and
---------------
defend the Lessor (to the extent not reimbursed by the Lessee within ten (10)
days after demand) from and against such Participant's Commitment Percentage (as
then in effect) of any and all liabilities, obligations, claims, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this Section 11.7 collectively
------------
called "Covered Liabilities") which to any extent (in whole or in part) may be
-------------------
imposed on, incurred by or asserted against the Lessor growing out of, resulting
from or in any other way associated with the Property or the Operative Documents
(including the enforcement thereof, whether exercised upon the Lessor's own
initiative or upon the direction of the Required Participants) and the
transactions and events at any time associated therewith or contemplated
therein. The foregoing indemnification shall apply whether or not such Covered
Liabilities are in any way or to any extent caused, in whole or in part, by any
negligent act or omission of any kind by the Lessor; provided, that no
--------
Participant shall be obligated under this Section 11.7 to indemnify the Lessor
------------
(i) for Covered Liabilities that would not have been incurred but for a
Voluntary Retention of the Property by the Lessor, (ii) for Covered Liabilities
incurred in connection with any transfer or assignment by the Lessor of its
right to receive Rent or its rights and interests in and to the Property, the
Operative Documents or this Agreement to its Affiliates, or (iii) for that
portion or percentage, if any, of any of the Covered Liabilities which is
proximately caused by: (A) the Lessor's own gross negligence or willful
misconduct; (B) any representation made by the Lessor in the Operative Documents
that is false in any material respect and that the Lessor knew was false at the
time of the Lessor's execution of the Operative Documents; or (C) Lessor Liens
not claimed by, through or under any of the Participants. After each Participant
has paid its Commitment Percentage (as then in effect) of any Covered
64
Liabilities, each Participant shall be entitled to payment from the Lessor of an
amount equal to the Adjusted Percentage (as defined below) of any payments
subsequently received by the Lessor as Excess Reimbursement (as defined below)
for such Covered Liabilities. As used in this Section "Adjusted Percentage" as
-------------------
of any date of determination shall equal (i) such Participant's Commitment
Percentage then in effect, divided by (ii) the sum of the Commitment Percentages
of all Participants who have paid the Lessor their respective shares of the
Covered Liabilities at issue. As used in this Section, the term "Excess
------
Reimbursement" shall mean, for the Covered Liabilities at issue, amounts
-------------
reimbursed or paid by the Lessee to or on behalf of the Lessor on account of
such Covered Liabilities in excess of an amount equal to the product of (i) such
Covered Liabilities, multiplied by (ii) the Commitment Percentages of any
Participants that have not paid the Lessor their respective Percentages of such
Covered Liabilities.
Section 11.8 Application of Payments Received From Defaulting
------------------------------------------------
Participant As a Cure For Payment Defaults. If after a failure to make a payment
------------------------------------------
required by Section 3.4, any Defaulting Participant cures such failure, in whole
-----------
or in part, by paying to the Lessor all or part of such payment and interest
thereon at the Late Payment Rate, then the Lessor shall apply the payments so
made to the Lessor, net of the costs of collecting such payments (the "Net Cure
--------
Proceeds"), or other funds available to the Lessor equal to the Net Cure
--------
Proceeds, in the following order before applying the same to any other purpose:
(i) first, to make payments to the Lessor itself equal to
its Excess Investment (if any) until the Lessor shall no longer have any
Excess Investment; and
(ii) second, to make further Advances to the Lessee under
this Agreement to the extent the Lessor is required or deems it
appropriate to do so; provided, that such further Advances do not cause
--------
the total Property Cost to exceed the sum of the Commitments.
Section 11.9 Order of Application. For purposes of this Agreement, the
--------------------
Lessor shall be entitled, but not required, to apply any payments received from
the Lessee under the Operative Documents to satisfy costs incurred by the Lessor
because of any sale under the Lease before applying such payments to satisfy the
Lessee's other obligations, regardless of how the Lessee may have designated
such payments.
Section 11.10 Investments Pending Dispute Resolution; Overnight
-------------------------------------------------
Investments. Whenever the Lessor in good faith determines that it does not
-----------
have all information needed to determine how payments to Participants must be
made on account of any then existing Participation Interests which the Lessor
has received, or whenever the Lessor in good faith determines that there is any
dispute among the Participants about payments which must be made on account of
Participation Interests actually received by the Lessor, the Lessor may choose
to defer the payments which are the subject of such missing information or
dispute. However, to minimize any such deferral, the Lessor shall attempt
diligently to obtain any missing information needed to determine how payments to
the Participants must be made. Also, pending any such deferral, or if the Lessor
is otherwise required to invest funds pending distribution to the Participants,
the Lessor shall invest funds equal to (i) the total of the Commitment
Percentages of all Participants to whom payments have not been made with respect
to the Participation Interests at issue, times (ii) the total payments at issue.
In addition, the Lessor shall endeavor to invest
65
payments of Participation Interests it receives after 12:00 noon, Chicago time,
on the day in question that are to be paid to a Participant on the next Business
Day pursuant to Section 3; provided that the Lessor shall have no liability to
---------
any Participant if the Lessor is unable to make such investments. Investments by
the Lessor shall be in the overnight federal funds market pending distribution,
and the interest earned on each dollar of principal so invested shall be paid to
the Person entitled to receive such dollar of principal when the principal is
paid to such Person.
Section 11.11 Agent to Exercise Lessor's Rights. The Lessor has assigned
---------------------------------
its interest in the Lease to the Agent, for the benefit of the Participants,
pursuant to the Assignment of Lease. To the extent provided therein, the rights,
remedies, duties and responsibilities of the Lessor contained in this Section 11
----------
and in the other Operative Documents with respect thereto shall be exercisable
by, binding upon and inure to the benefit of the Agent, for the benefit of the
Participants.
Section 11.12 Exculpatory Provisions Regarding the Lessor. Subject to
------------------------------------------
the provisions of Section 11.11, each Participant hereby irrevocably authorizes
-------------
the Lessor to take such actions on its behalf as are expressly vested in or
delegated to the Lessor by the terms of this Agreement and the other Operative
Documents, together with such powers as are reasonably incidental thereto. The
provisions of the following Sections of this Agreement are hereby incorporated
by reference into this Section 11.12, substituting the word "Lessor" for "Agent"
-------------
therein:
(i) Section 14.1 - second sentence.
------------
(ii) Section 14.2 - all.
------------
(iii) Section 14.3 - all.
------------
(iv) Section 14.4 - all.
------------
(v) Section 14.5 - first sentence.
------------
(vi) Section 14.6 - last sentence.
------------
SECTION 2
TRANSFERS OF PARTICIPANTS' INTERESTS
Section 12.1 Restrictions on and Effect of Transfer by Participants. No
------------------------------------------------------
Participant may (without the prior written consent of the Agent and (prior to a
Lease Event of Default) Lessee, in either case not to be unreasonably withheld)
assign, convey or otherwise transfer (including pursuant to a participation) all
or any portion of its right, title or interest in, to or under its Participation
Interest or any of the Operative Documents or the Property, provided that (x)
--------
any Participant may pledge its interest without the consent of the Agent or the
Lessee to any Federal Reserve Bank, (y) without the prior written consent of the
Agent, any Participant may
66
transfer all or any portion of its interest to any Affiliate of such Participant
or to any other existing Participant, and (z) the Lessor may not transfer its
Tranche C Equity Interest in the absence of a Lease Event of Default; provided,
--------
further, that in the case of any transfer (other than a transfer to an Affiliate
------
of the relevant Participant) each of the following conditions and any other
applicable conditions of the other Operative Documents are satisfied:
(a) Required Notice and Effective Date. Any Participant desiring to effect
----------------------------------
a transfer of its interest shall give written notice of each such proposed
transfer to the Lessee and the Agent at least five (5) Business Days prior to
such proposed transfer, setting forth the name of such proposed transferee, the
percentage or interest to be retained by such Participant, if any, and the date
on which such transfer is proposed to become effective. All reasonable out-of-
pocket costs (including, without limitation, legal expenses) incurred by the
Lessor, the Lessee, the Agent or any Participant in connection with any such
disposition by a Participant under this Section 12.1 shall be borne by such
------------
transferring Participant. In the event of a transfer under this Section 12.1,
------------
any expenses incurred by the transferee in connection with its review of the
Operative Documents and its investigation of the transactions contemplated
thereby shall be borne by such transferee or the relevant Participant, as they
may determine, but shall not be considered costs and expenses which the Lessee
is obligated to pay or reimburse under Section 9. Any such proposed transfer
---------
shall become effective upon the later of (i) the date proposed in the transfer
notice referred to above and (ii) the date on which all conditions to such
transfer set forth in this Section 12.1 shall have been satisfied.
------------
(b) Assumption of Obligations. Any transferee pursuant to this Section
------------------------- -------
12.1 shall execute and deliver to the Agent and the Lessee an Assignment and
----
Acceptance in substantially the form attached as Exhibit I ("Assignment and
--------- --------------
Acceptance"), duly executed by such transferee and the transferring Participant,
-----------
and a letter in substantially the form of the Participant's Letter attached
hereto as Exhibit J ("Participant's Letter"), and thereupon the obligations of
--------- ---------------------
the transferring Participant under the Operative Documents shall be
proportionately released and reduced to the extent of such transfer. Upon any
such transfer as above provided, the transferee shall be deemed to be bound by
all obligations (whether or not yet accrued) under, and to have become a party
to, all Operative Documents to which its transferor was a party, shall be deemed
the pertinent "Participant" for all purposes of the Operative Documents and
shall be deemed to have made that portion of the payments pursuant to this
Participation Agreement previously made or deemed to have been made by the
transferor represented by the interest being conveyed; and each reference herein
and in the other Operative Documents to the pertinent "Participant" shall
thereafter be deemed a reference to the transferee, to the extent of such
transfer, for all purposes. Upon any such transfer, the Agent shall deliver to
each Participant, the Lessor and the Lessee a new Schedule I and a new Schedule
---------- --------
II to this Agreement, each revised to reflect the relevant information for such
--
new Participant and the Commitment of such new Participant (and the revised
Commitment of the transferor Participant if it shall not have transferred its
entire interest).
(c) Employee Benefit Plans. No Participant may make any such assignment,
----------------------
conveyance or transfer to or in connection with any arrangement or understanding
in any way involving any employee benefit plan (or its related trust), as
defined in Section 3(3) of ERISA, or
67
with the assets of any such plan (or its related trust), as defined in Section
4975(e)(1) of the Code.
(d) Representations. Notwithstanding anything to the contrary set
---------------
forth above, no Participant may assign, convey or transfer its interest to any
Person, unless such Person shall have delivered to the Agent and the Lessee a
certificate confirming the accuracy of the representations and warranties set
forth in Section 8 with respect to such Person (other than as such
---------
representation or warranty relates to the execution and delivery of Operative
Documents) and representing that such Person has, independently and without
reliance upon the Agent, any other Participant or, except to the extent of the
Lessee's representations made under the Operative Documents when made, the
Lessee, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into this transaction,
the Property and the Lessee and made its own decision to enter into this
transaction.
(e) Amounts; Agent's Fee. Any transfer of Participation Interests
--------------------
prior to commencement of construction of the Improvements shall be in a
principal amount which is equal to or greater than $1,000,000 and $5,000,000
thereafter; provided, that no such minimum transfer limitation shall be imposed
--------
on a transfer of a Tranche B Participation Interest or a Tranche C Equity
Interest. Each transferring Participant shall pay to the Agent a transfer fee of
$2,500.
(f) Applicable Law. Such transfer shall comply with Applicable Law
--------------
and shall not require registration under any securities law applicable thereto.
(g) Effect. From and after any transfer of its Participation
------
Interest the transferring Participant shall be released, to the extent assumed
by the transferee, from its liability and obligations hereunder and under the
other Operative Documents to which such transferor is a party in respect of
obligations to be performed on or after the date of such transfer. Upon any
transfer by a Participant as above provided, any such transferee shall be deemed
a "Participant" for all purposes of such documents and each reference herein to
a Participant shall thereafter be deemed a reference to such transferee for all
purposes to the extent of such transfer, except as the context may otherwise
require. Notwithstanding any transfer as provided in this Section 12.1, the
------------
transferor shall be entitled to all benefits accrued and all rights vested prior
to such transfer, including, without limitation, rights to indemnification under
this Participation Agreement or any other Operative Document.
Section 12.2 Covenants and Agreements of Participants.
----------------------------------------
(a) Participations. Each Participant covenants and agrees that it
--------------
will not grant participations in its Participation Interest to any Person (a
"Sub-Participant") unless such participation complies with Applicable Law and
---------------
does not require registration under any securities law applicable thereto and
such Sub-Participant (i) is a bank or other financial institution and (ii)
represents and warrants, in writing, to such Participant for the benefit of the
Participants, the Lessor and the Lessee that (A) no part of the funds used by it
to acquire an interest in any Participation Interest constitutes assets of any
"employee benefit plan" (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code)
and (B) such Sub-Participant is acquiring its interest for investment
68
purposes without a view to the distribution thereof. Any such Person shall
require any transferee of its interest in its Participation Interest to make the
representations and warranties set forth in the preceding sentence, in writing,
to such Person for its benefit and the benefit of the Participants, the Lessor
and Lessee. In the event of any such sale by a Participant of a participating
interest in its Participation Interest to a Sub-Participant, such Participant's
obligations under this Participation Agreement and under the other Operative
Documents shall remain unchanged, such Participant shall remain solely
responsible for the performance thereof, such Participant shall remain the
holder of its Participation Interest for all purposes under this Participation
Agreement and under the other Operative Documents, and the Lessor, the Agent
and, except as set forth in Section 12.2(b), the Lessee shall continue to deal
---------------
solely and directly with such Participant in connection with such Participant's
rights and obligations under this Participation Agreement and under the other
Operative Documents.
(b) Transferee Indemnities. Each Sub-Participant shall be entitled
----------------------
to the benefits of Sections 13.5, 13.6, and 13.7 and 13.10 with respect to its
------------- ---- ---- -----
participation in the Participation Interests outstanding from time to time;
provided that no Sub-Participant shall be entitled to receive any greater amount
--------
pursuant to such Sections than the transferor Participant would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Participant to such Sub-Participant had no such transfer or
participation occurred.
Section 12.3 Future Participants
-------------------
Each Participant shall be deemed to be bound by and, upon compliance with the
requirements of this Section 12, will be entitled to all of the benefits of the
----------
provisions of, this Participation Agreement.
SECTION 3
INDEMNIFICATION
Section 13.1 General Indemnification. The Lessee agrees, whether or not
-----------------------
any of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After Tax Basis, from and against, any and all Claims that may
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise), whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not such Claim arises or accrues prior to the Closing Date or
after the Expiration Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby or any violation thereof, or any investigation, litigation
or proceeding in connection therewith, and any amendment, modification or waiver
in respect thereof;
(b) the Property, the Lease, any permitted sublease or any part
thereof or interest therein;
69
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including, without limitation, any sale
pursuant to Sections 16.2, 16.3, 17.2(c), 17.2(e), 17.2(h) or 17.4 of the Lease
or any sale pursuant to Articles XX or XXII of the Lease (except for any amounts
payable pursuant to Section 13.2 hereof), 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, without limitation: (1) Claims or penalties arising
from any violation of foreign, federal, state or local law, rule, regulation or
order or in tort (strict liability or otherwise) arising in connection with the
Property, the Operative Documents or the transactions contemplated thereunder,
including Claims made by invitees of Lessee or any assignee or any sublessee of
Lessee or any assignee, or by any other Person entering on or in the Property
(2) latent or other defects in, to or affecting the Property, 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, (4) the making of any Modifications in
violation of the Lease or any standards imposed by any insurance policies
required to be maintained by Lessee pursuant to the Lease which are in effect at
any time with respect to the Property or any part thereof, (5) any Claim for
patent, trademark or copyright infringement, (6) Claims arising from any public
improvements with respect to the Property resulting in any charge or special
assessments being levied against the Property or any plans to widen, modify or
realign any street or highway adjacent to the Property, (7) Claims based on
violations or failure of title arising in connection with the zoning ordinances,
rules, regulations or laws applicable to the Property and (8) any claim
resulting from or related to the leasing or subleasing of the Property or the
construction of the Improvements;
(d) the offer, issuance or sale of the Participation Interests or any
interest therein in accordance with the terms of the Operative Documents;
(e) the breach by the Lessee of any covenant, representation or warranty
made by it or deemed made by it in any Operative Document or any certificate
required to be delivered by any Operative Document;
(f) the retaining or employment of any broker, finder or financial advisor
by the Lessee or any Affiliate to act on its behalf in connection with this
Participation Agreement, or the incurring of any fees or commissions to which
the Lessor might be subjected by virtue of entering into the transactions
contemplated by this Participation Agreement;
(g) the existence of any Lien on or with respect to the Property, the
Improvements, the Equipment, the Lease, any Basic Rent or Supplemental Rent,
title thereto, or any interest therein including any Liens which arise out of
the possession, use, occupancy, construction, repair or rebuilding of the
Property or by reason of labor or materials furnished or claimed to have been
furnished to the Lessee, the Existing Owner, the Lessor or any of their
contractors or agents or by reason of the financing of the Property or any
personalty or equipment purchased or leased by the Lessee or Improvements or
Modifications constructed by the Lessee or any sublessee, except Lessor Liens
and Liens in favor of the Agent or the Lessor;
70
(h) the transactions contemplated hereby, by the Lease or by any
other Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code (other than any Claim resulting from a breach of
representation or warranty of the Lessor or any Participant); or
(i) the purchase of the Property by the Lessor, or any matters
arising therefrom or related thereto;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
-------- -------
under this Section 13.1 for any of the following: (1) any Claim to the extent
------------
resulting from the willful misconduct or gross negligence of such Indemnitee (it
--
being understood that the Lessee shall be required to indemnify an Indemnitee
----------------
even if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim), (2) any Claim resulting from Lessor Liens which the
Lessor is responsible for discharging under the Operative Documents, (3) any
Imposition or other claims for Taxes of the type(s) described in Section 13.5,
-------------
(4) any Claims of the type(s) described in Sections 13.2, 13.6, 13.7, 13.8 and
------------- ---- ---- ----
13.10, or (5) any such Claim under this Section 13.1 arising with respect to the
----- ------------
Improvements only prior to the Completion Date except as follows:
(A) The Lessee shall indemnify the Lessor from and against
any Claim Within the Lessee's Control, subject to the following:
(1) if such Claim is not related to an inability or
failure to complete construction of the Improvements (or if such
Claim is related to an inability or failure to complete
construction of the Improvements but also constitutes or arises
out of a Fully Indemnifiable Event), the indemnification provided
in this Section 13.1 shall not be subject to any monetary
------------
limitation; and
(2) if such Claim is related to an inability or
failure to complete construction of the Improvements and such
Claim does not constitute or arise out of a Fully Indemnifiable
Event, the Lessee's monetary obligation for indemnification
provided in this Section 13.1 together with all other similarly
------------
limited amounts payable prior to the Complete Date under Section
-------
9.1(b)(i), Section 9.3(b)(i), Section 13.10, clause (i)(B) to the
--------- ----------------- -------------
the proviso of Section 24.1 of the Lease and any similarly
limited payment obligation of the Lessee in connection with the
return or sale of the Property under the Lease or the
Construction Agency Agreement, shall not exceed the maximum Land
Interest Residual Value Guarantee Amount and Improvements
Residual Value Guarantee Amount.
(B) If any Lessor Party incurs any such claims or expenses
for which the Lessee is not obligated to indemnify such Lessor Party
pursuant to clause (5)(i) of this Section 13.1, such claims shall, if
------------- ------------
such Lessor Party shall so request by a written notice to the Lessor
and the Lessor shall give its prior written consent thereto, be
capitalized pursuant to Section 3.7(e)(ii).
------------------
71
It is expressly understood and agreed that the indemnity provided for herein
shall survive the expiration or termination of and shall be separate and
independent from any remedy under the Lease or any other Operative Document.
Section 13.2 End of Term Indemnity.
---------------------
(a) If the Lessee elects the Remarketing Option and it is
determined, in accordance with the provisions of Section 22.1(j) of the Lease,
that there would, after giving effect to the proposed remarketing transaction,
be a Shortfall Amount, then as a condition to the Lessee's right to complete the
remarketing of the Property pursuant to Section 22.1 of the Lease, the Lessee
shall cause to be delivered to the Lessor at least 30 days prior to the
Expiration Date, at the Lessee's sole cost and expense, a report from an
appraiser selected by the Lessor and reasonably satisfactory to the Agent and
the Required Participants and the Lessee in form and substance satisfactory to
the Lessor, the Agent and the Required Participants (the "End of the Term
---------------
Report") which shall state the appraiser's conclusions as to the reason for any
-------
decline in the Fair Market Sales Value of the Property from that anticipated for
such date in the Appraisal delivered on the Improvements Closing Date.
(b) On the Expiration Date, the Lessee shall pay to the Lessor
an amount (not to exceed the Shortfall Amount) equal to the portion of the
Shortfall Amount that the End of the Term Report demonstrates was the result of
a decline in the Fair Market Sales Value of the Property due to:
(i) extraordinary wear and tear, excessive usage, failure
to maintain, to repair, to restore, to rebuild or to replace, failure to
comply with the Lease and all applicable laws, failure to use, workmanship,
method of installation or removal or maintenance, repair, rebuilding or
replacement (excepting in each case ordinary wear and tear);
(ii) any Modification made to, or any rebuilding of, the
Property or any part thereof by the Lessee or any sublessee; or
(iii) the existence of any Hazardous Activity, Hazardous
Substance or Environmental Violations; or
(iv) any restoration or rebuilding carried out by the
Lessee or any sublessee; or
(v) any condemnation of any portion of the Property
pursuant to Article XV of the Lease; or
(vi) any use of the Property or any part thereof by the
Lessee or any sublessee other than as corporate headquarters and research
and development and/or manufacturing facilities; or
(vii) any grant, release, dedication, transfer, annexation
or amendment made pursuant to Section 12.2 of the Lease; or
72
(viii) the failure of the Lessor to have a good and
marketable fee estate in the Property, as required by the Operative
Documents, free and clear of all Liens (including Permitted Liens) and
exceptions to title, except (A) such Liens or exceptions to title that
existed on the Closing Date and were disclosed in the title report and
approved by the Agent; (B) Liens that would be released as a result of
consummation of the Remarketing Option or other required sale of the
Property; and (C) Lessor Liens.
Section 13.3 Environmental Indemnity. Without limitation of the other
-----------------------
provisions of this Section 13, the Lessee hereby agrees to indemnify, hold
----------
harmless and defend each Indemnitee, on an After Tax Basis, from and against any
and all claims (including without limitation third party claims for personal
injury or real or personal property damage), losses (including but not limited
to any loss of value of the Property), damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings (including informal
proceedings) and orders, judgments, remedial action, requirements, enforcement
actions of any kind, and all reasonable and documented costs and expenses
incurred in connection therewith (including but not limited to reasonable and
documented attorneys' and/or paralegals' fees and expenses), including, but not
limited to, all costs incurred in connection with any investigation or
monitoring of site conditions or any clean-up, remedial, removal or restoration
work by any foreign, federal, state or local government agency, which such
Indemnitee becomes subject to because of its involvement with the Property, the
transactions contemplated by the Operative Documents or any other matter
referred to in paragraphs (a) through (i) of Section 13.1 arising in whole or in
-------------- --- ------------
part, out of:
(a) the presence on or under the Property of any Hazardous
Substances, or any Releases or discharges of any Hazardous Substances on, under,
from or onto the Property;
(b) any activity, including, without limitation, construction,
carried on or undertaken on or off the Property, and whether by the Lessee, the
Lessor, the Existing Owner, any predecessor in title or any sublessee or any
employees, agents, contractors or subcontractors of the Lessee, the Lessor, the
Existing Owner or any predecessor in title, or any other Persons (including such
Indemnitee), in connection with the handling, treatment, removal, storage,
decontamination, cleanup, transport or disposal of any Hazardous Substances that
at any time are located or present on or under or that at any time migrate,
flow, percolate, diffuse or in any way move onto or under the Property;
(c) loss of or damage to any property or the environment
(including, without limitation, cleanup costs, response costs, remediation and
removal costs, cost of corrective action, costs of financial assurance, fines
and penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic species,
vegetation, flora and fauna, and any mitigative action required by or under
Environmental Laws;
(d) any 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 to record a Lien on the
land records;
73
(e) any residual contamination on or under the Property, or
affecting any natural resources, or 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, and irrespective of
whether any of such activities were or will be undertaken in accordance with
applicable Environmental Laws; or
(f) any material inaccuracies, misrepresentations,
misstatements, and omissions and any conflicting information contained in or
omitted from the Environmental Audit;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
-------- -------
under this Section 13.3 for (1) any Claim to the extent resulting from the
------------
willful misconduct or gross negligence of such Indemnitee (it being understood
-- ----- ----------
that the Lessee shall be required to indemnify an Indemnitee even if the
ordinary (but not gross) negligence of such Indemnitee caused or contributed to
such Claim), (2) any Imposition or other claims for Taxes of the type(s)
described in Section 13.5, or (3) any Claims of the type(s) described in
------------
Sections 13.2, 13.6, 13.7, 13.8 and 13.10. It is expressly understood and
------------- ---- ---- ---- -----
agreed that the indemnity provided for herein shall survive the expiration or
termination of and shall be separate and independent from any remedy under the
Lease or any other Operative Document.
Section 13.4 Proceedings in Respect of Claims. With respect to any
--------------------------------
amount that the Lessee is requested by an Indemnitee to pay by reason of Section
-------
13.1 or 13.3, such Indemnitee shall, if so requested by the Lessee and prior to
---- ----
any payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall notify the Lessee of the commencement thereof,
and if the Construction Period limitation on indemnification set forth in clause
------
(5) of the proviso to Section 13.1 does not apply, the Lessee shall be entitled,
--- ------------
at its expense, to participate in, and, to the extent that the Lessee desires
to, assume and control the defense thereof; provided, however, that the Lessee
-------- -------
shall have acknowledged in writing its obligation to fully indemnify such
Indemnitee in respect of such action, suit or proceeding, and the Lessee shall
keep such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with respect
to such action, suit or proceeding as such Indemnitee shall reasonably request,
and provided further, that the Lessee shall not be entitled to assume and
-------- -------
control the defense of any such action, suit or proceeding if and to the extent
that, (A) in the reasonable opinion of such Indemnitee, (x) such action, suit or
proceeding involves any possibility of imposition of criminal liability or any
risk of material civil liability on such Indemnitee or will involve a material
risk of the sale, forfeiture or loss of, or the creation of any Lien (other than
a Permitted Exception) on, the Property or any part thereof unless, in the case
of civil liability or Lien, the Lessee shall have posted a bond or other
security satisfactory to the relevant Indemnitee in respect to such risk or (y)
the control of such action, suit or proceeding would involve an actual or
potential conflict of interest, (B) such proceeding involves Claims not fully
indemnified by the Lessee which the Lessee and the Indemnitee have been unable
to sever from the indemnified claim(s), or (C) an Event of Default under the
Lease has occurred and is continuing. The Indemnitee may participate in a
reasonable manner at its own expense and with its own counsel in any proceeding
74
conducted by the Lessee in accordance with the foregoing. The Lessee shall not
enter into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 13.1 or 13.3 without the prior written
------------ ----
consent of the Indemnitee which consent shall not be unreasonably withheld in
the case of a money settlement not involving an admission of liability of such
Indemnitee.
Each Indemnitee shall at the expense of the Lessee cooperate with and
supply the Lessee with such information and documents reasonably requested by
the Lessee as are necessary or advisable for the Lessee to participate in any
action, suit or proceeding to the extent permitted by Section 13.1 or 13.3.
------------ ----
Unless an Event of Default under the Lease shall have occurred and be
continuing, no Indemnitee shall enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under Section 13.1
------------
or 13.3 without the prior written consent of the Lessee, which consent shall not
----
be unreasonably withheld, unless such Indemnitee waives its right to be
indemnified under Section 13.1 or 13.3 with respect to such Claim.
------------ ----
Upon payment in full of any Claim by the Lessee pursuant to Section 13.1 or
------------
13.3 to or on behalf of an Indemnitee, the Lessee, without any further action,
----
shall be subrogated to any and all claims that such Indemnitee may have relating
thereto (other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3 shall
------------ ----
be paid to such Indemnitee promptly upon receipt of a written demand therefor
from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable.
Section 13.5 General Impositions Indemnity.
-----------------------------
(a) Indemnification. The Lessee shall pay and assume liability for,
---------------
and does hereby agree to indemnify, protect and defend the Property and all
Indemnitees, and hold them harmless against, all Impositions on an After Tax
Basis.
(b) Payments.
--------
(i) Subject to the terms of Section 13.5(f), the Lessee shall
---------------
pay or cause to be paid all Impositions directly to the taxing authorities
where feasible and otherwise to the Indemnitee, as appropriate, and the
Lessee shall at its own expense, upon such Indemnitee's reasonable request,
furnish to such Indemnitee copies of official receipts or other
satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 13.5(f) and which the Lessee pays directly to
---------------
the taxing authorities, the Lessee shall pay such Impositions prior to the
latest time permitted by the relevant
75
taxing authority for timely payment. In the case of Impositions for which
the Lessee reimburses an Indemnitee, the Lessee shall do so within twenty
(20) days after receipt by the Lessee of demand by such Indemnitee
describing in reasonable detail the nature of the Imposition and the basis
for the demand (including the computation of the amount payable), but in no
event shall the Lessee be required to pay such reimbursement prior to
thirty (30) days before the latest time permitted by the relevant taxing
authority for timely payment. In the case of Impositions for which a
contest is conducted pursuant to Section 13.5(f), the Lessee shall pay such
---------------
such Impositions or reimburse such Indemnitee for such Impositions, to the
extent not previously paid or reimbursed pursuant to Section 13.5(a), prior
---------------
to the latest time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under Section 13.5(f).
---------------
(iii) Impositions imposed with respect to the Property for a
billing period during which the Lease expires or terminates (unless the
Lessee has exercised the Renewal Option or the Purchase Option with respect
to the Property) shall be adjusted and prorated on a daily basis between
the Lessee and the Lessor, whether or not such Imposition is imposed before
or after such expiration or termination, and each party shall pay or
reimburse the other for each party's pro rata share thereof.
(c) Reports and Returns. (i) The Lessee shall be responsible for
-------------------
preparing and filing any real and personal property or ad valorem tax returns in
respect of the Property. In case any other report or tax return shall be
required to be made with respect to any obligations of the Lessee under or
arising out of Section 13.5(a) and of which the Lessee has knowledge or should
---------------
have knowledge, the Lessee, at its sole cost and expense, shall notify the
relevant Indemnitee of such requirement and (except if such Indemnitee notifies
the Lessee that such Indemnitee intends to file such report or return) (A) to
the extent required or permitted by and consistent with Applicable Law, make and
file in its own name such return, statement or report; and (B) in the case of
any other such return, statement or report required to be made in the name of
such Indemnitee, advise such Indemnitee of such fact and prepare such return,
statement or report for filing by such Indemnitee or, where such return,
statement or report shall be required to reflect items in addition to any
obligations of the Lessee under or arising out of Section 13.5(a), provide such
---------------
Indemnitee at the Lessee's expense with information sufficient to permit such
return, statement or report to be properly made with respect to any obligations
of the Lessee under or arising out of Section 13.5(a). Such Indemnitee shall,
---------------
upon the Lessee's request and at the Lessee's expense, provide any data
maintained by such Indemnitee (and not otherwise available to or within the
control of the Lessee) with respect to the Property which the Lessee may
reasonably require to prepare any required tax returns or reports. Each
Indemnitee agrees to use its best efforts to send to the Lessee a copy of any
written request or other notice that the Indemnitee receives with respect to any
reports or returns required to be filed with respect to the Property or the
transactions contemplated by the Operative Documents, it being understood that
no Indemnitee shall have any liability for failure to provide such copies.
(d) Income Inclusions. If as a result of the payment or
-----------------
reimbursement by the Lessee of any expenses of the Lessor or the payment of any
Transaction Expenses incurred in connection with the transactions contemplated
by the Operative Documents, the Lessor or any Indemnitee shall suffer a net
increase in any federal, state or local income tax liability, the Lessee
76
shall indemnify such Indemnitee (without duplication of any indemnification
required by Section 13.5(a)) on an After Tax Basis for the amount of such
--------------
increase. The calculation of any such net increase shall take into account any
current or future tax savings realized or reasonably expected to be realized by
such Indemnitee in respect thereof, as well as any interest, penalties and
additions to tax payable by the Indemnitee in respect thereof.
(e) Withholding Taxes. As between the Lessee on one hand, and the
-----------------
Lessor or the Agent or any Participant on the other hand, the Lessee shall be
responsible for, and, subject to the provisions of Sections 13.5(g) and (h), the
---------------- ---
Lessee shall indemnify and hold harmless the Lessor, the Agent and the
Participants (without duplication of any indemnification required by Section
-------
13.5(a)) on an After Tax Basis against, any obligation for United States or
-------
foreign withholding taxes imposed in respect of payments with respect to the
Participation Interests or with respect to Rent payments under the Lease or
payments of the Asset Termination Value, Lease Balance or Purchase Option Price
(and, if the Lessor, the Agent or any Participant receives a demand for such
payment from any taxing authority, the Lessee shall discharge such demand on
behalf of the Lessor, the Agent or such Participant).
(f) Contests of Impositions.
-----------------------
(i) If a written claim is made against any Indemnitee or if
any proceeding shall be commenced against such Indemnitee (including a
written notice of such proceeding), for any Impositions, such Indemnitee
shall promptly notify the Lessee in writing and shall not take action with
respect to such claim or proceeding without the consent of the Lessee for
thirty (30) days after the receipt of such notice by the Lessee; provided,
--------
however, that, in the case of any such claim or proceeding, if action shall
be required by law or regulation to be taken prior to the end of such 30-
day period, such Indemnitee shall, in such notice to the Lessee, inform the
Lessee of such shorter period, and no action shall be taken with respect to
such claim or proceeding without the consent of the Lessee before 2 days
before the end of such shorter period; provided, further, that the failure
-------- -------
of such Indemnitee to give the notices referred to this sentence shall not
diminish the Lessee's obligation hereunder except to the extent such
failure precludes the Lessee from contesting all or part of such claim.
(ii) If, within thirty (30) days of receipt of such notice from
the Indemnitee (or such shorter period as the Indemnitee has notified the
Lessee is required by law or regulation for the Indemnitee to commence such
contest), the Lessee shall request in writing that such Indemnitee contest
such Imposition, the Indemnitee shall, at the expense of the Lessee, in
good faith conduct and control such contest (including, without limitation,
by pursuit of appeals) relating to the validity, applicability or amount of
such Impositions (provided, however, that (A) if such contest involves a
--------
tax other than a tax on net income and can be pursued independently from
any other proceeding involving a tax liability of such Indemnitee, the
Indemnitee, at the Lessee's request, shall allow the Lessee to conduct and
control such contest and (B) in the case of any contest, the Indemnitee may
request the Lessee to conduct and control such contest) by, in the sole
discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using
reasonable efforts to obtain a refund thereof in
77
appropriate administrative and judicial proceedings, or (4) taking such
other action as is reasonably requested by the Lessee from time to time.
(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the non-controlling
party reasonably informed as to the conduct of such contest; provided, that
--------
all decisions ultimately shall be made in the sole discretion of the
controlling party. The parties agree that an Indemnitee may at any time
decline to take further action with respect to the contest of any
Imposition and may settle such contest if such Indemnitee shall waive its
rights to any indemnity from the Lessee that otherwise would be payable in
respect of such claim (and any future claim by any taxing authority, the
contest of which is precluded by reason of such resolution of such claim)
and shall pay to the Lessee any amount previously paid or advanced by the
Lessee pursuant to this Section 13.5 by way of indemnification or advance
------------
for the payment of an Imposition other than expenses of such contest.
(iv) Notwithstanding the foregoing provisions of this Section
-------
13.5, an Indemnitee shall not be required to take any action and the Lessee
----
shall not be permitted to contest any Impositions in its own name or that
of the Indemnitee unless (A) the Lessee shall have agreed to pay and shall
pay to such Indemnitee on demand and on an After Tax Basis all reasonable
costs, losses and expenses that such Indemnitee actually incurs in
connection with contesting such Impositions, including, without limitation,
all reasonable legal, accounting and investigatory fees and disbursements,
(B) in the case of a claim that must be pursued in the name of an
Indemnitee (or an Affiliate thereof), the amount of the potential indemnity
(taking into account all similar or logically related claims that have been
or could be raised in any audit involving such Indemnitee for which the
Lessee may be liable to pay an indemnity under this Section 13.5) exceeds
------------
$100,000, (C) the Indemnitee shall have reasonably determined that the
action to be taken will not result in any material danger of sale,
forfeiture or loss of the Property, or any part thereof or interest
therein, will not interfere with the payment of Rent, and will not result
in risk of criminal liability, (D) if such contest shall involve the
payment of the Imposition prior to the contest, the Lessee shall provide to
the Indemnitee an interest-free advance in an amount equal to the
Imposition that the Indemnitee is required to pay (with no additional net
after-tax cost to such Indemnitee), (E) in the case of a claim that must be
pursued in the name of an Indemnitee (or an Affiliate thereof), the Lessee
shall have provided to such Indemnitee an opinion of independent tax
counsel selected by the Indemnitee and reasonably satisfactory to the
Lessee stating that a reasonable basis exists to contest such claim (or, in
the case of an appeal of an adverse determination, an opinion of such
counsel to the effect that there is substantial authority for the position
asserted in such appeal) and (F) no Event of Default hereunder shall have
occurred and be continuing. In no event shall an Indemnitee be required to
appeal an adverse judicial determination to the United States Supreme
Court. In addition, an Indemnitee shall not be required to contest any
claim in its name (or that of an Affiliate) if the subject matter thereof
shall be of a continuing nature and shall have previously been decided
adversely by a court of competent jurisdiction pursuant to the contest
provisions of this Section 13.5, unless there shall have been a change in
------------
law (or interpretation thereof) and the Indemnitee shall have received, at
the Lessee's expense, an opinion of independent tax
78
counsel selected by the Indemnitee and reasonably acceptable to the Lessee
stating that as a result of such change in law (or interpretation thereof),
it is more likely than not that the Indemnitee will prevail in such
contest.
(g) Documentation of Withholding Status. Each Participant (or any
-----------------------------------
successor thereto or transferee thereof) that is organized under the laws of a
jurisdiction outside of the United States of America shall:
(i) on or before the date it becomes a party to any Operative
Document, deliver to the Lessor and the Lessee any certificates, documents,
or other evidence that shall be required by the Code or Treasury
Regulations issued pursuant thereto to establish its exemption from United
States Federal withholding requirements, including two valid, duly
completed, original copies of Internal Revenue Service Form W-8BEN or Form
W-8ECI or successor applicable form, properly and duly executed, certifying
in each case that such party is entitled to receive payments pursuant to
the Operative Documents without deduction or withholding of United States
Federal income taxes and is a foreign person thereby entitled to an
exemption from the United States backup withholding taxes;
(ii) on or before the date that any such form described above
expires or becomes obsolete, or after the occurrence of any event requiring
a change in the most recent such form previously delivered to the Lessor
and the Lessee, deliver to the Lessor and the Lessee two further valid,
duly completed, original copies of any such form or certification, properly
and duly executed; and
(iii) comply from time to time with all United States laws and
regulations with regard to such withholding tax exemptions.
(h) Limitation on Tax Indemnification. The Lessee shall not be
---------------------------------
required to indemnify any Indemnitee, or to pay any increased amounts to any
Indemnitee or tax authority with respect to any withholding taxes pursuant to
this Section 13.5 to the extent that (i) any obligation to withhold, deduct, or
------------
pay amounts with respect to Tax existed on the date such Indemnitee became a
party to any Operative Document (and, in such case, the Lessee may deduct and
withhold such Tax from payments pursuant to the Operative Documents), or (ii)
such Indemnitee fails to comply with the provisions of Section 13.5(g) (and, in
---------------
such case, the Lessee may deduct and withhold all Taxes required by law as a
result of such noncompliance from payments made by the Lessee pursuant to the
Operative Documents). With respect to any transferee of any Participant
(including a transfer resulting from any change in the designation of the
lending office of a Participant), the transferee shall not be entitled to any
greater payment or indemnification under this Section 13.5 than the transferor
------------
would have been entitled to.
Section 13.6 Funding Losses. If any payment of any Advance or any
--------------
portion of any Participation Interest is made on any day other than the last day
of an Interest Period applicable thereto, or if the Lessee fails to utilize the
proceeds of any purchase of Participation Interests after notice has been given
to the Lessor or any Participant in accordance with Section 3 or 6, the Lessee
--------- -
shall reimburse the Lessor and each Participant on an After Tax Basis within
fifteen (15) days after demand for any resulting loss or expense incurred by it,
including (without limitation)
79
any loss incurred in obtaining, liquidating or employing deposits from third
parties, provided that the Lessor or such Participant, as the case may be, shall
have delivered to the Lessee a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error.
The Lessor or such Participant, as applicable, will, at the request of the
Lessee, furnish such additional information concerning the determination of such
loss as the Lessee may reasonably request.
Section 13.7 Regulation D Compensation. For so long as the Lessor or any
-------------------------
Participant is required to increase its existing reserve percentage against
"Eurocurrency Liabilities" (or any other category of liabilities which include
deposits by reference to which the interest rate on its Participation Interest
in any Advance is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of the Lessor or such
Participant, as applicable, to United States residents), and, as a result, the
cost to the Lessor or such Participant (or such Participant's Funding Office) of
purchasing or maintaining its Participation Interest in any Advance is
increased, then the Lessor or such Participant may require the Lessee to pay, on
an After Tax Basis, contemporaneously with each payment of interest on the
Advances an additional amount on the Participation Interest of such Participant
in the Advances at a rate per annum up to but not exceeding the excess of (i)
(A) the applicable Eurodollar Rate divided by (B) one minus the Eurocurrency
Reserve Requirements over (ii) the applicable Eurodollar Rate.
Section 13.8 Basis for Determining Interest Rate Inadequate or Unfair. If
--------------------------------------------------------
on or prior to the first day of any Interest Period:
(a) deposits in dollars (in the applicable amounts) are not being
offered to the Agent in the relevant market for such Interest Period or any
Participant shall advise the Agent that the Eurodollar Rate as determined by the
Agent will not adequately and fairly reflect the cost to such Participant of
funding its Participation Interest in any Advance for such Interest Period; or
(b) any Participant determines that, by reason of the adoption, on or
after the date of this Participation Agreement, of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Participant (or its Funding Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
governmental agency, it is restricted, directly or indirectly, in the amount it
may hold of (i) a category of liabilities that includes deposits by reference to
which, or on the basis of which, the interest rate applicable to Advances based
on the Eurodollar Rate is directly or indirectly determined, or (ii) the
category of assets which includes Advances based on the Eurodollar Rate;
the Agent shall forthwith give notice thereof to the Lessee and the
Participants, whereupon the obligation of the Participants to provide funding at
rates based upon the Eurodollar Rate shall be suspended and, until the Agent
notifies the Lessee that the circumstances giving rise to such suspension no
longer exist, each outstanding Advance shall begin to bear interest at the
Alternate Base Rate on the last day of the then current Interest Period
applicable thereto.
80
Section 13.9 Illegality. If, on or after the date of this Participation
----------
Agreement, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Participant (or
its Funding Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency, shall
make it unlawful or impossible for any Participant (or its Funding Office) to
purchase, maintain or fund its Participation Interest in any Advance and such
Participant shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Participants and the Lessee, whereupon until such
Participant notifies the Lessee and the Agent that the circumstances giving rise
to such suspension no longer exist, the obligation of such Participant to
purchase its Participation Interest in any Advance shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Participant shall,
if practicable, with the consent of the Lessee (which consent shall not
unreasonably be withheld), designate a different Funding Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Participant, be otherwise disadvantageous to such Participant.
If such notice is given (i) the Lessee shall be entitled upon its request to a
reasonable explanation of the factors underlying such notice and (ii) each
outstanding Participation Interest in any Advance of such Participant then
outstanding shall begin to bear interest at the Alternate Base Rate either (a)
on the last day of the then current Interest Period applicable to such Advance
if such Participant may lawfully continue to maintain and fund such
Participation Interest to such day or (b) immediately if such Participant shall
determine that it may not lawfully continue to maintain and fund such
Participation Interest to such day.
Section 3.10 Increased Cost and Reduced Return.
---------------------------------
(a) In the event that the adoption of any applicable law, rule or
regulation, or any change therein or in the interpretation or application
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by the Lessor or
any Participant with any request or directive after the date hereof (whether or
not having the force of law) of any such authority, central bank or comparable
agency:
(i) does or shall subject the Lessor or such Participant to
any additional tax of any kind whatsoever with respect to the Operative
Documents or any Advance made by such Person or any purchase of a
Participation Interest in any Advance, or change the basis or the
applicable rate of taxation of payments to the Lessor or such Participant
of its Participation Interest or any other amount payable hereunder (except
for the imposition of or change in any tax on or measured by the overall
net income of the Lessor or such Participant (other than any such tax
imposed by means of withholding));
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, insurance assessment, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of the
81
Lessor or such Participant which are not otherwise included in
determination of the rate of interest on Advances hereunder; or
(iii) does or shall impose on the Lessor or such Participant any
other condition;
and the result of any of the foregoing is to increase the cost to the Lessor or
such Participant of making or maintaining its Advances or purchasing or
maintaining its Participation Interest in any Advance or to reduce any amount
receivable hereunder with respect thereto, then in any such case, prior to the
Completion Date, the Lessor shall pay to the Participants and the Lessee shall
pay to the Lessor, and thereafter the Lessee shall promptly pay the Lessor or
such Participant, as the case may be, upon its demand, on an After Tax Basis,
any additional amounts necessary to compensate the Lessor or such Participant
for such increased cost or reduced amount receivable which the Lessor or such
Participant deems to be material as determined by the Lessor or such
Participant.
(b) If the Lessor or any Participant shall have determined that,
after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency has or would have the effect of reducing the rate of return on capital of
the Lessor or such Participant, as the case may be (or any entity directly or
indirectly controlling the Lessor or such Participant), as a consequence of the
Lessor's or such Participant's obligations under the Operative Documents to a
level below that which the Lessor or such Participant (or any entity directly or
indirectly controlling the Lessor or such Participant), as applicable, could
have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by the Lessor or such Participant to be material, then from time to time, within
15 days after demand by the Lessor or such Participant (with a copy to the
Agent), prior to the Completion Date, the Lessor shall pay to the Participants
and the Lessee shall pay to the Lessor, and thereafter the Lessee shall pay to
the Lessor or such Participant, as the case may be, on an After Tax Basis, such
additional amount or amounts as will compensate such Participant (or its parent)
or the Lessor for such reduction.
(c) The Lessor and each Participant will promptly notify the Lessee
and the Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle the Lessor or such Participant, as the case may be,
to compensation pursuant to this Section and will, if practicable, with the
consent of the Lessee (which consent shall not unreasonably be withheld),
designate a different Funding Office or take any other reasonable action if such
designation or action will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of the Lessor or such Participant, as
applicable, be otherwise disadvantageous to the Lessor or such Participant. A
certificate of the Lessor or any Participant claiming compensation under this
Section and setting forth in reasonable detail its computation of the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, the Lessor or such Participant,
as the case may be, may use any reasonable averaging and attribution methods.
This Section shall survive the
82
termination of this Participation Agreement and payment of the outstanding
Advances and Participation Interests.
Section 13.11 Substitution of Participant. If (i) the obligation of any
---------------------------
Participant to purchase or maintain its Participation Interest has been
suspended pursuant to this Section 13, or (ii) any Participant has demanded
----------
compensation or given notice of its intention to demand compensation under
Section 13.10, the Lessee shall have the right, with the assistance of the
-------------
Agent, to seek one or more mutually satisfactory substitute banks or financial
institutions (which may be one or more of the Participants) to replace such
Participant under the Operative Documents.
Section 13.12 Indemnity Payments in Addition to Residual Value Guarantee
----------------------------------------------------------
Amount. The Lessee acknowledges and agrees that its obligations to make payments
------
under this Section 13 are separate from, in addition to, and do not reduce, its
----------
obligation to pay, the Land Interest Residual Value Guarantee Amount and the
Improvements Residual Value Guarantee Amount under the Lease; provided, that in
--------
the event the Lessee elects the Remarketing Option, the Lessee shall only be
required to pay any Shortfall Amount to the extent set forth in Section 13.2
------------
hereof.
Section 13.13 Limitations on Indemnification. Notwithstanding any other
------------------------------
provisions of Sections 13.1 or 13.10 hereof or Section 24.1 of the Lease (the
------------- -----
"Indemnification Sections") to the contrary, with respect to the Improvements
only, prior to the Completion Date, the Lessee (i) shall be obligated to
indemnify only the Lessor for any Claims of the Lessor under Section 13.1 or
------------
costs or losses under Section 13.10 or losses under Section 24.1 of the Lease
-------------
(collectively "Lessor Losses") provided, that such Lessor Losses shall include
costs and expenses of the Lessor under Section 13.14 and (ii) shall have no
-------------
right to contest any matter covered under Sections 13.1 or 13.10 hereof or
------------- -----
Section 24.1 of the Lease, notwithstanding the language of Sections 13.1 or
------------ -------------
13.10 hereof or Section 24.1 of the Lease, if such matter is not fully
----- ------------
indemnifiable by the Lessee because of the operation of this Section 13.13 or
-------------
because such matter is not indemnifiable due to the exclusions set forth in
clause 5(A)(2) of the proviso to Section 13.1, or clause (i)(B) of the proviso
-------------- ------------
to Section 24.1 of the Lease.
Section 13.14 Lessor Indemnification.
----------------------
(a) Indemnified Losses. Prior to the Completion Date, the Lessor
------------------
shall pay, indemnify, protect, defend, save and keep harmless each Indemnitee
(other than the Lessor, its Affiliates, successors, assigns, directors,
shareholders, partners, officers, employees and agents) (an "Indemnified Party")
-----------------
on an After Tax Basis from and against any Losses (as hereinafter defined)
arising from Covered Matters (as hereinafter defined), subject to the
limitations set forth in this Section 13.14.
-------------
(b) Definitions. For purposes of this Section 13.14, the
----------- -------------
following terms shall have the meanings set forth below:
"Covered Matters" means each of the matters set forth in the
---------------
Indemnification Sections (subject to the exceptions and exclusions set
forth therein).
83
"Losses" means each of the Claims, Impositions, losses, costs or
------
expenses indemnified against pursuant to any of the Indemnification
Sections (subject to the exceptions and exclusions set forth therein) and
arising prior to the Completion Date.
(c) No Indemnification for Certain Matters. The Lessor shall not be
--------------------------------------
required to indemnify or hold harmless any Indemnified Party hereunder against
any matter referred to in clause (a) of this Section 13.14 to the extent of the
-------------
exceptions or exclusions from indemnification contained in any of the
Indemnification Sections.
(d) Limitations on Indemnification by Lessor. The Lessor's obligation
----------------------------------------
to indemnify and hold harmless any Indemnified Party under this Section:
(i) is not an individual or personal obligation of the Lessor,
but solely its obligation in its capacity as Lessor, and nothing herein
shall be construed as creating any liability on the Lessor, individually or
personally, to pay, indemnify or hold harmless any Indemnified Party under
this Section;
(ii) is not an obligation binding on the Lessor except to the
extent of any payments received by the Lessor pursuant to the
Indemnification Sections;
(iii) shall be paid and discharged solely and exclusively from
amounts received by the Lessor pursuant to the Indemnification Sections,
and it is expressly agreed by each Indemnified Party that the sole recourse
of each such Person for payment or discharge of the indemnification
obligations created under this Section 13.14 shall be to such amounts paid
-------------
by the Lessee pursuant to the Indemnification Sections; and
(iv) is the sole and exclusive right of each Indemnified Party
against the Lessor, and any right to proceed against the Lessor
individually or otherwise under common law, federal or state securities
laws or otherwise for indemnification or contribution in connection with
the matters covered by this Section 13.14, is hereby expressly waived by
-------------
each Indemnified Party (other than claims that may be made against the
Lessor, individually or personally, for fraud, gross negligence or willful
misconduct).
Nothing in this Section 13.14 is intended as or should be construed as a
-------------
limitation on the right of any Indemnified Party to make indemnification,
contribution or other claims of any kind against the Lessee, to the extent that
such claims otherwise may be made, with respect to any matter, including
indemnification for Losses of the type referred to in this Section 13.14.
-------------
(e) Repayment to the Lessor. To the extent that any payments made
-----------------------
pursuant to the Indemnification Sections are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid by the
Lessor to a trustee, debtor in possession, receiver or other Person under any
Bankruptcy Law, common law or equitable cause, then to such extent, the
Indemnified Parties who received any such payments from the Lessor (or any
portion thereof) shall repay on an After Tax Basis any such amounts to the
Lessor, or as may otherwise be directed by a court of competent jurisdiction,
provided that no such Indemnified Party shall be obligated to repay to the
Lessor an amount greater than the payment received by such Indemnified Party
from the Lessor.
84
(f) Survival, Reinstatement. The indemnification obligations of the
-----------------------
Lessor under this Section shall survive and be reinstated to the same extent,
for the same period and in the same manner as the indemnification obligations of
the Lessee under the Indemnification Sections.
(g) Indemnification Procedures. The right of any Indemnified Party to
--------------------------
seek indemnification from the Lessor under this Section 13.14 is subject to and
-------------
conditioned upon compliance by any such Indemnified Party with the notice,
cooperation, appointment of counsel, contest rights and other provisions in the
Indemnification Sections (including, without limitation, the exceptions to or
exclusions from indemnification set forth therein) as fully as if such Sections
were set forth herein, except that any reference in the Indemnification Sections
to the Lessee shall be deemed to be a reference to the Lessor or, if the Lessor
so directs in any case, the Lessor and/or the Lessee for purposes of this
Section.
SECTION 14
THE AGENT
Section 14.1 Appointment. Each Participant hereby irrevocably designates
-----------
and appoints the Agent as the agent of such Participant under this Agreement and
the other Operative Documents, and each Participant irrevocably authorizes the
Agent, in such capacity, to take such action on its behalf under the provisions
of this Agreement and the other Operative Documents and to exercise such powers
and perform such duties as are expressly delegated to the Agent by the terms of
this Agreement and the other Operative Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Participant or any other party to the Operative Documents,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Operative Document or
otherwise exist against the Agent.
Section 14.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement and the other Operative Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 14.3 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Operative
Document (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Participants or any
other party to the Operative Documents for any recitals, statements,
representations or warranties made by the Lessor or the Lessee or any officer
thereof contained in this Agreement or any other Operative Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this
85
Agreement or any other Operative Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Operative Document or for any failure of the Lessor or the Lessee to
perform its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Participant or any other party to the Operative Documents
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Operative
Document, or to inspect the properties, books or records of the Lessor or the
Lessee.
Section 14.4 Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, 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 (including, without
limitation, counsel to the Lessor or the Lessee), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
Operative Document unless it shall first receive such advice or concurrence of
the Required Participants as it deems appropriate or it shall first be
indemnified to its satisfaction by the Participants 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 this Agreement and the
other Operative Documents in accordance with a request of the Required
Participants, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Participants.
Section 14.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Participant, the Lessor or the Lessee
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the other parties hereto. Subject to the
provisions of Section 11 hereof, the Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Required Participants; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Participants.
Section 14.6 Non-Reliance on Agent and Other Participants. Each
--------------------------------------------
Participant expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Lessor or the Lessee, shall be
deemed to constitute any representation or warranty by the Agent to any
Participant. Each Participant represents to the Agent that it has, independently
and without reliance upon the Agent or any other Participant, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Lessor, the Lessee and the Property
and made its own decision to purchase its Participation Interest hereunder and
enter into this Agreement. Each Participant also represents that it will,
independently and without reliance upon the Agent, the Lessor or any other
Participant, and based on such
86
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Operative Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Lessor and the Lessee. Except for notices, reports and other documents expressly
required to be furnished to the Participants by the Agent hereunder, the Agent
shall not have any duty or responsibility to provide any Participant with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the Lessor
or the Lessee which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 14.7 Indemnification. The Participants agree to indemnify the
---------------
Agent in its capacity as such (to the extent not reimbursed by the Lessee and
without limiting the obligation of the Lessee to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought under this Section 14.7 (or, if indemnification is
------------
sought after the date upon which the Commitments shall have terminated and the
Participation Interests shall have been paid in full, ratably in accordance with
their Commitment Percentages in effect immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Participation Interests) be imposed on, incurred by
or asserted against the Agent in any way relating to or arising out of, the
Commitments, this Agreement, the Property, any of the other Operative Documents
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
any of them under or in connection with any of the foregoing; provided that no
Participant shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the gross negligence or willful
misconduct of the Agent. The agreements in this Section 14.7 shall survive the
------------
payment of the Participation Interests and all other amounts payable hereunder.
Section 14.8 Agent in its Individual Capacity. The Agent and its Affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with the Lessor or the Lessee as though the Agent were not the Agent
hereunder and under the other Operative Documents. With respect to its
Participation Interest purchased by it, the Agent shall have the same rights and
powers under this Agreement and the other Operative Documents as any Participant
and may exercise the same as though it were not the Agent, and the terms
"Participant" and "Participants" shall include the Agent in its individual
capacity.
Section 14.9 Successor Agent. The Agent may resign as Agent upon 30 days'
---------------
notice to the Participants, the Lessor and the Lessee. If the Agent shall resign
as Agent under this Agreement and the other Operative Documents, then the
Required Participants shall appoint a successor Agent for the Participants. Any
such successor Agent shall be a commercial bank organized under the laws of the
United States of America or any State thereof or under the laws of another
country which is doing business in the United States of America and having a
combined capital, surplus and undivided profits of at least $100,000,000
(provided that so long as no Default or Event of Default exists, the successor
Agent shall be approved by the Lessee
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(which approval shall not be unreasonably withheld)). Upon such appointment (a)
such successor Agent shall succeed to the rights, powers and duties of the
Agent, and the term "Agent" shall mean such successor Agent effective upon such
appointment, and (b) 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 of the parties to this Agreement. If no successor Agent has
accepted appointment as Agent by the date which is 30 days following a resigning
Agent's notice of resignation, the resigning Agent's resignation shall
nevertheless thereupon become effective and the Participants shall perform all
of the duties of the Agent hereunder until such time, if any, as the Required
Participants appoint a successor Agent as provided above. After any retiring
Agent's resignation as Agent, all of the provisions of this Section 14 shall
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inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement and the other Operative Documents.
SECTION 5
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 Agreement, the transfer of the
Property to the Lessor, the construction of any Improvements, any disposition of
any interest of the Lessor in the Property or any Improvements, payment of the
Advances and the Participation Interests and any disposition thereof and shall
be and continue in effect notwithstanding any investigation made by any party or
the fact that any party may waive compliance with any of the other terms,
provisions or conditions of any of the Operative Documents. Except as otherwise
expressly set forth herein or in other Operative Documents, the indemnities of
the parties provided for in the Operative Documents shall survive the expiration
or termination of any thereof.
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 other than ▇▇▇▇ Financial Corporation,
whose fees and commissions are the responsibility of Lessee, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act. Any party who is in breach of this representation shall
indemnify and hold the other parties harmless from and against any liability
arising out of such breach of this representation.
Section 15.3 Notices. Unless otherwise specifically provided herein, all
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notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing and delivered (i) personally, (ii) by a
nationally recognized overnight courier service, (iii) by mail (by registered or
certified mail, return receipt requested, postage prepaid) or (iv) by facsimile,
in each case directed to the address of such Person as indicated on Schedule II.
-----------
Any such notice shall be effective upon receipt or refusal.
88
From time to time any party may designate a new address for purposes of
notice hereunder by written notice to each of the other parties hereto in
accordance with this Section.
Section 15.4 Counterparts. This Participation Agreement may be executed by
------------
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 15.5 Headings, etc. The Table of Contents and headings of the
-------------
various Sections of this Agreement are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof.
Section 15.6 Parties in Interest. Except as expressly provided herein,
-------------------
none of the provisions of this Participation Agreement are intended for the
benefit of any Person except the parties hereto. Subject to the provisions of
Section 25.1 of the Lease, the Lessee shall not assign or transfer any of its
rights or obligations under the Operative Documents without the prior written
consent of the Lessor, the Agent and the Participants.
Section 15.7 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 15.8 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 15.9 Liability Limited.
-----------------
(a) The Lessee, the Agent, and the Participants each acknowledge
and agree that the Lessor shall have no personal liability whatsoever to the
Lessee, the Agent or any Participant or their respective successors and assigns
for any claim based on or in respect of this Participation Agreement or any of
the other Operative Documents or arising in any way from the transactions
contemplated hereby or thereby; provided, however, that the Lessor shall be
-------- -------
liable in its individual capacity (a) for its own willful misconduct or gross
negligence (or negligence in the handling of funds), (b) for liabilities that
may result from the incorrectness of any representation or warranty expressly
made by it in Section 8.1 hereof or from the failure of the Lessor to perform
-----------
its covenants and agreements set forth in Section 10.3 hereof, or (c) for any
------------
Taxes based on or measured by any fees, commission or compensation received by
it for acting as the Lessor as contemplated by the Operative Documents. It is
understood and agreed that, except as provided in the preceding proviso: (i) the
Lessor shall have no personal liability under any of the Operative Documents as
a result of acting pursuant to and consistent with any of the Operative
Documents; (ii) all obligations of the Lessor to the Lessee, the Agent or any
Participant are solely nonrecourse obligations except to the extent that it has
received payment
89
from others and are enforceable solely against the Lessor's interest in the
Property; and (iii) all such personal liability of the Lessor is expressly
waived and released as a condition of, and as consideration for, the execution
and delivery of the Operative Documents by the Lessor.
(b) No Participant shall have any obligation to any other Participant
or to the Lessee, the Lessor or the Agent with respect to transactions
contemplated by the Operative Documents, except those obligations of such
Participant expressly set forth in the Operative Documents or except as set
forth in the instruments delivered in connection therewith, and no Participant
shall be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
Section 15.10 Further Assurances. The parties hereto shall promptly cause
------------------
to be taken, executed, acknowledged or delivered, at the sole expense of the
Lessee, all such further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Participation Agreement, the other
Operative Documents, and the transactions contemplated hereby and thereby
(including, without limitation, the preparation, execution and filing of any and
all Uniform Commercial Code financing statements and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including any action specified in the preceding sentence), or (if the Lessor
shall so request) as so requested, in order to maintain and protect all security
interests provided for hereunder or under any other Operative Document.
Section 15.11 Submission to Jurisdiction. The Lessee hereby submits to the
--------------------------
nonexclusive jurisdiction of the United States District Court for the Northern
District of California and of any California State court sitting in Alameda
County for purposes of all legal proceedings arising out of or relating to the
Operative Documents or the transactions contemplated hereby. The Lessee
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
Section 15.12 Confidentiality. The Lessor, the Agent and each Participant
---------------
represent that they will maintain the confidentiality of the transactions
contemplated by, and of any written or oral information provided under, the
Operative Documents by or on behalf of the Lessee (hereinafter collectively
called "Confidential Information"), subject to the Lessor's, the Agent's and
each Participant's (a) obligation to disclose any such Confidential Information
pursuant to a request or order under applicable laws and regulations or pursuant
to a subpoena or other legal process, (b) right to disclose any such
Confidential Information to its bank examiners, Affiliates, auditors, counsel
and other professional advisors and to other Participants, (c) right to disclose
any such Confidential Information in connection with any litigation or dispute
involving the Participants and the Lessee or any of its Subsidiaries and
Affiliates and (d) right to provide such information to Sub-Participants,
prospective Sub-Participants to which sales of participating interests are
permitted pursuant to this Participation Agreement and prospective assignees to
which assignments of interests are permitted pursuant to this Participation
Agreement, but only if (i) such Sub-Participant, prospective Sub-Participant or
prospective assignee agrees in writing to
90
maintain the confidentiality of such information on terms substantially similar
to those of this Section as if it were a "Participant" party hereto and (ii) the
Lessee receives copies of such written agreement prior to the release of such
information. Notwithstanding the foregoing, any such information supplied to a
Participant, Sub-Participant, prospective Sub-Participant or prospective
assignee under this Participation Agreement shall cease to be Confidential
Information if it is or becomes known to such Person by other than unauthorized
disclosure, or if it becomes a matter of public knowledge.
Section 5.13 WAIVER OF JURY TRIAL. EACH OF THE LESSEE, THE AGENT, THE
--------------------
LESSOR, AND EACH PARTICIPANT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE
OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.14 Amendment and Restatement. This Second Amended and Restated
-------------------------
Participation Agreement amends, restates and replaces the Existing Participation
Agreement, which Existing Participation Agreement in turn amended, restated and
replaced the Original Participation Agreement provided, however, that this
-------- -------
Agreement is not a novation or discharge of the obligations of the Lessee or the
Lessor under the Existing Participation Agreement or the Original Participation
Agreement, all of which obligations are in all respects continuing and
outstanding and all of which continue to be secured by all Liens granted
pursuant to the Operative Documents. The parties hereto agree that, from and
after the date of this Second Amended and Restated Participation Agreement, each
reference to the "Participation Agreement" in the Operative Documents shall be
deemed without further amendment to be a reference to such agreement as amended
and restated by this Second Amended and Restated Participation Agreement.
[signature page follows]
91
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.
ASYST TECHNOLOGIES, INC.,
as Lessee
By: /s/ ▇▇▇▇▇▇� �. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇� �. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President,
Chief Financial Officer
LEASE PLAN NORTH AMERICA, INC.,
as Lessor and as a Participant
By: /s/ ▇▇▇▇▇▇▇▇� �. ▇▇▇▇▇▇▇▇�
Name: ▇▇▇▇▇▇▇▇� �. ▇▇▇▇▇▇▇▇�
Title: Vice President
AMRO BANK N.V., as Agent and as a
Participant
By: /s/ ▇▇▇▇▇▇▇▇� �. ▇▇▇▇▇▇▇▇�
Name: ▇▇▇▇▇▇▇▇� �. ▇▇▇▇▇▇▇▇�
Title: Vice President
By: /s/ ▇▇▇▇▇▇ �. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ �. ▇▇▇▇▇▇▇▇
Title: Vice President
FLEET NATIONAL BANK, as participant
By: /s/ ▇▇▇▇ �. ▇▇▇▇▇▇�
Name: ▇▇▇▇ �. ▇▇▇▇▇▇�
Title: Director
▇▇▇▇� FARGO BANK, N.A., as a
Participant
By: /s/ ▇▇▇▇� ▇▇▇▇▇▇
Name: ▇▇▇▇� ▇▇▇▇▇▇
Title: Vice President
COMERICA BANK - CALIFORNIA,
as a Participant
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇�
Name: ▇▇▇▇▇▇ ▇▇▇▇�
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
as a Participant
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President