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EXHIBIT 4.1
PARTICIPATION AGREEMENT
Dated as of November 26, 1997
among
QUORUM ELF, INC.,
as the Construction Agent and as the Lessee,
THE VARIOUS PARTIES HERETO
FROM TIME TO TIME,
as the Guarantors
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the Quorum Real Estate Trust 1997-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE
PARTIES HERETO FROM TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE
PARTIES HERETO FROM TIME TO TIME, as the Lenders,
and
FIRST UNION NATIONAL BANK,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
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TABLE OF CONTENTS
PAGE
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SECTION 1. THE LOANS...................................................................1
SECTION 2. HOLDER ADVANCES.............................................................2
SECTION 3. SUMMARY OF TRANSACTIONS.....................................................2
3.1. Operative Agreements..........................................................2
3.2. Property Purchase.............................................................2
3.3. Construction of Improvements; Commencement of Basic Rent Obligations..........3
SECTION 4. THE CLOSINGS................................................................3
4.1. Initial Closing Date..........................................................3
4.2. Initial Closing Date; Property Closing Dates; Acquisition Advances;
Construction Advances.........................................................3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.....................3
5.1. General.......................................................................3
5.2. Procedures for Funding........................................................4
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the
Holders Relating to the Initial Closing Date and the Advance of Funds
for the Acquisition of a Property.............................................6
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the
Holders Relating to the Advance of Funds after the Acquisition Advance.......11
5.5. Additional Reporting and Delivery Requirements on Completion Date and
on Construction Period Termination Date......................................13
5.6. The Construction Agent Delivery of Construction Budget Modifications.........14
5.7. Restrictions on Liens........................................................14
5.8. Additional Availability under Commitments and Holder Commitments.............15
5.9. Joinder Agreement Requirements...............................................15
SECTION 6. REPRESENTATIONS AND WARRANTIES.............................................16
6.1. Representations and Warranties of the Holders................................16
6.2. Representations and Warranties of the Borrower...............................17
6.3. Representations and Warranties of the Construction Agent and the Lessee......20
6.4. Representations and Warranties of the Agent..................................25
6B.1. Guaranty of Payment and Performance.........................................26
6B.2. Obligations Unconditional...................................................26
6B.3. Modifications...............................................................27
6B.4. Waiver of Rights............................................................28
6B.5. Reinstatement...............................................................28
6B.6. Remedies....................................................................29
6B.7. Limitation of Guaranty......................................................29
6B.9. Release of Guarantors.......................................................29
SECTION 7. PAYMENT OF CERTAIN EXPENSES................................................30
7.1. Transaction Expenses.........................................................30
7.2. [Intentionally Omitted]......................................................31
7.3. Certain Fees and Expenses....................................................31
7.4. Unused Fee...................................................................31
7.5. Administrative Fee...........................................................32
SECTION 8. OTHER COVENANTS AND AGREEMENTS.............................................32
8.1. Cooperation with the Construction Agent or the Lessee........................32
8.2. Covenants of the Owner Trustee and the Holders...............................32
8.3. Credit Party Covenants, Consent and Acknowledgment...........................34
8.4. Sharing of Certain Payments..................................................37
8.5. Grant of Easements, etc......................................................37
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner Trustee.....38
8.7. Collection and Allocation of Payments and Other Amounts......................38
8.8. Release of Properties, etc...................................................42
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.......................................42
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights............42
9.2. The Construction Agent's and the Lessee's Trust Agreement Rights.............43
SECTION 10. TRANSFER OF INTEREST......................................................43
10.1. Restrictions on Transfer....................................................43
10.2. Effect of Transfer..........................................................44
SECTION 11. INDEMNIFICATION...........................................................44
11.1. General Indemnity...........................................................44
11.2. General Tax Indemnity.......................................................47
11.3. Increased Costs, Illegality, etc............................................51
11.4. Funding/Contribution Indemnity..............................................53
SECTION 12. MISCELLANEOUS.............................................................54
12.1. Survival of Agreements......................................................54
12.2. No Broker, etc..............................................................54
12.3. Notices.....................................................................54
12.4. Counterparts................................................................56
12.5. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters.............56
12.6. Headings, etc...............................................................57
12.7. Parties in Interest.........................................................58
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
VENUE; ARBITRATION..........................................................58
12.9. Severability................................................................60
12.10. Liability Limited..........................................................60
12.11. Rights of the Credit Parties...............................................61
12.12. Further Assurances.........................................................62
12.13. Calculations under Operative Agreements....................................62
12.14. Confidentiality............................................................62
12.15. Financial Reporting/Tax Characterization...................................63
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EXHIBITS
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - [Intentionally Omitted]
D - Form of Officer's Certificate - Section 5.3(aa)
E - Form of Officer's Certificate - Section 5.3(bb)
F - Form of Officer's Certificate - Section 5.3(dd)
G - Form of Officer's Certificate - Section 5.3(ee)
H - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(ff)
I - Form of Outside Counsel Opinion for the Lessee - Section 5.3(gg)
J - Form of Officer's Certificate - Section 5.5
K - Description of Material Litigation - Section 6.3(d)
L - Form of Joinder Agreement - Section 5.9
M - States of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.3(i)
N - Form of Officer's Compliance Certificate - Section 8.3(k)
Appendix A - Rules of Usage and Definitions
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of November 26, 1997 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among QUORUM ELF, INC., a Delaware corporation (the
"Lessee" or the "Construction Agent"); the various parties hereto from time to
time as guarantors (subject to the definition of Guarantors in Appendix A
hereto, individually, a "Guarantor" and collectively, the "Guarantors"); FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually (in its individual capacity, the "Trust Company"), except as
expressly stated herein, but solely as the Owner Trustee under the Quorum Real
Estate Trust 1997-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); the
various banks and other lending institutions which are parties hereto from time
to time as lenders (subject to the definition of Lenders in Appendix A hereto,
individually, a "Lender" and collectively, the "Lenders"); FIRST UNION NATIONAL
BANK, a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests (in such capacity, the "Agent"); the various
banks and other lending institutions which are parties hereto from time to time
as holders of certificates issued with respect to the Quorum Real Estate Trust
1997-1 (subject to the definition of Holders in Appendix A hereto, individually,
a "Holder" and collectively, the "Holders"). Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and in reliance
on the representations and warranties of each of the parties hereto contained
herein or made pursuant hereto, the Lenders have agreed to make Loans to the
Lessor from time to time in an aggregate principal amount of up to the aggregate
amount of the Commitments of the Lenders in order for the Lessor to acquire the
Properties and certain Improvements, to develop and construct certain
Improvements in accordance with the Agency Agreement and the terms and
provisions hereof to construct Modifications and for the other purposes
described herein, and in consideration of the receipt of proceeds of the Loans,
the Lessor will issue the Notes. The Loans shall be made and the Notes shall be
issued pursuant to the Credit Agreement. Pursuant to Section 5 of this Agreement
and Section 2 of the Credit Agreement, the Loans will be made to the Lessor from
time to time at the request of (a) the Construction Agent in consideration for
the Construction Agent agreeing for the benefit of the Lessor, pursuant to the
Agency Agreement, to acquire the Properties, to acquire the Equipment, to
construct certain Improvements and to cause the Lessee to lease the Properties,
each in accordance with the Agency Agreement and the other Operative Agreements
or (b) the Lessee in consideration for the Lessee agreeing for the benefit of
the Lessor, pursuant to the Lease, to construct Modifications in accordance with
the Lease and the other Operative Agreements. The Loans and the obligations of
the
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Lessor under the Credit Agreement shall be secured by the Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and in reliance
on the representations and warranties of each of the parties hereto contained
herein or made pursuant hereto, on each date Advances are requested to be made
in accordance with Section 5 hereof, each Holder shall make a Holder Advance on
a pro rata basis to the Lessor with respect to the Quorum Real Estate Trust
1997-1 based on its Holder Commitment in an amount in immediately available
funds such that the aggregate of all Holder Advances on such date shall be three
percent (3%) of the amount of the Requested Funds on such date; provided, that
no Holder shall be obligated for any Holder Advance in excess of its pro rata
share of the Available Holder Commitment. The aggregate amount of Holder
Advances shall be up to the aggregate amount of the Holder Commitments. No
prepayment or any other payment with respect to any Advance shall be permitted
such that the Holder Advance with respect to such Advance is less than three
percent (3%) of the outstanding amount of such Advance, except in connection
with termination or expiration of the Term or in connection with the exercise of
remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
On the date hereof, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, each applicable Ground
Lease, the Agency Agreement, the Credit Agreement, the Notes, the Trust
Agreement, the Certificates, the Security Agreement, each applicable Mortgage
Instrument and such other documents, instruments, certificates and opinions of
counsel as agreed to by the parties hereto.
3.2. PROPERTY PURCHASE.
On each Property Closing Date and subject to the terms and conditions
of this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement, (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement, (c) the Lessor will purchase and acquire good and marketable title to
or ground lease pursuant to a Ground Lease the applicable Property, in each case
pursuant to a Deed, ▇▇▇▇ of Sale or Ground Lease, as the case may be, and grant
the Agent a lien on such Property by execution of the required Security
Documents, (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property and (e) the Term shall commence with
respect to such Property.
3.3. CONSTRUCTION OF IMPROVEMENTS; COMMENCEMENT OF BASIC RENT
OBLIGATIONS.
Construction Advances will be made with respect to particular
Improvements to be constructed and with respect to ongoing Work regarding the
Equipment and construction of particular Improvements, in each case, pursuant to
the terms and conditions of this Agreement, the Agency Agreement or Section
11.1(c) of the Lease. The Construction Agent (or, respecting Section 11.1(c) of
the Lease, the Lessee) will act
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as a construction agent on behalf of the Lessor respecting the Work regarding
the Equipment, the construction of such Improvements (or, respecting Section
11.1(c) of the Lease, the Modifications) and the expenditures of the
Construction Advances related to the foregoing. The Construction Agent shall
promptly notify the Lessor and the Agent upon Completion of the Improvements and
the Lessee shall commence to pay Basic Rent as of the Rent Commencement Date.
The Lessee shall promptly notify the Lessor and the Agent upon completion of
each Modification.
SECTION 4. THE CLOSINGS.
4.1. INITIAL CLOSING DATE.
All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC,
Charlotte, North Carolina, or at such other location as may be determined by the
Lessor, the Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION
ADVANCES; CONSTRUCTION ADVANCES.
The Construction Agent (or, respecting Section 11.1(c) of the Lease,
the Lessee) shall deliver to the Agent a requisition (a "Requisition"), in the
form attached hereto as EXHIBIT A or in such other form as is satisfactory to
the Agent, in its reasonable discretion, in connection with (a) the Transaction
Expenses and other fees, expenses and disbursements payable, pursuant to Section
7.1, by the Lessor and (b) each Acquisition Advance pursuant to Section 5.3 and
(c) each Construction Advance pursuant to Section 5.4.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
(a) To the extent funds have been advanced to the Lessor as
Loans by the Lenders and to the Lessor as Holder Advances by the
Holders, the Lessor will use such funds from time to time in accordance
with the terms and conditions of this Agreement and the other Operative
Agreements (i) at the direction of the Construction Agent to acquire
the Properties in accordance with the terms of this Agreement, the
Agency Agreement and the other Operative Agreements, (ii) to make
Advances to the Construction Agent to permit the acquisition, testing,
engineering, installation, development, construction, modification,
design, and renovation, as applicable, of the Properties (or components
thereof) in accordance with the terms of the Agency Agreement and the
other Operative Agreements, (iii) to make Advances to the Lessee to
fund Modifications pursuant to Section 11.1(c) of the Lease, and (iv)
to pay Transaction Expenses, fees, expenses and other disbursements
payable by the Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and
Holder Yield on the Holder Advances on any Scheduled Interest Payment
Date with respect to any Property during the period prior to the Rent
Commencement Date with respect to such Property, (i) each Lender's Loan
shall automatically be increased by the amount of interest accrued and
unpaid on such Loan for such period (except to the extent that at any
time such increase would cause such Lender's Loan to exceed
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such Lender's Available Commitment, in which case the Lessee shall pay
such excess amount to such Lender in immediately available funds on the
date such Lender's Available Commitment was exceeded), and (ii) each
Holder's Holder Advance shall automatically be increased by the amount
of Holder Yield accrued and unpaid on such Holder Advance for such
period (except to the extent that at any time such increase would cause
the Holder Advance of such Holder to exceed such Holder's Available
Holder Commitment, in which case the Lessee shall pay such excess
amount to such Holder in immediately available funds on the date the
Available Holder Commitment of such Holder was exceeded). Such
increases in a Lender's Loan and a Holder's Holder Advance shall occur
without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
(a) The Construction Agent (or, respecting Section 11.1(c) of
the Lease, the Lessee) shall designate the date for Advances hereunder
in accordance with the terms and provisions hereof; provided, however,
it is understood and agreed that no more than two (2) Advances may be
requested during any calendar month. Not less than (i) three (3)
Business Days prior to the Initial Closing Date and (ii) three (3)
Business Days prior to the date on which any Acquisition Advance or
Construction Advance is to be made, the Construction Agent shall
deliver to the Agent, (A) with respect to the Initial Closing Date and
each Acquisition Advance, a Requisition as described in Section 4.2
hereof (including without limitation a legal description of the Land, a
schedule of the Improvements, if any, and a schedule of the Equipment,
if any, acquired or to be acquired on such date, and a schedule of the
Work, if any, to be performed, each of the foregoing in a form
reasonably acceptable to the Agent) and (B) with respect to each
Construction Advance, a Requisition identifying (among other things)
the Property to which such Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request
funds in an amount that is not in excess of the total aggregate of the
Available Commitments plus the Available Holder Commitments at such
time, and (iii) request that the Holders make Holder Advances and that
the Lenders make Loans to the Lessor for the payment of Transaction
Expenses, Property Acquisition Costs (in the case of an Acquisition
Advance) or other Property Costs (in the case of a Construction
Advance) that have previously been incurred or are to be incurred on
the date of such Advance to the extent such were not subject to a prior
Requisition, in each case as specified in the Requisition.
(c) Subject to the satisfaction of the conditions precedent
set forth in Sections 5.3 or 5.4, as applicable, on each Property
Closing Date or the date on which the Construction Advance is to be
made, as applicable, (i) the Lenders shall make Loans based on their
respective Lender Commitments to the Lessor in an aggregate amount
equal to ninety-seven percent (97%) of the Requested Funds specified in
any Requisition (ratably between the Tranche A Lenders and the Tranche
B Lenders with the Tranche A Lenders funding eighty-five percent (85%)
of the Requested Funds and the Tranche B Lenders funding twelve percent
(12%) of the Requested Funds), up to an aggregate principal amount
equal to the aggregate of the Available Commitments, (ii) each Holder
shall make a Holder Advance based on its Holder Commitment in an amount
such that the aggregate of all Holder Advances at such time shall be
three percent (3%) of the balance of the Requested Funds specified in
such Requisition, up to the aggregate advanced amount equal to the
aggregate of the Available Holder Commitments; and (iii) the
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total amount of such Loans and Holder Advances made on such date shall
(x) be used by the Lessor to pay Property Costs and/or Transaction
Expenses within three (3) Business Days of the receipt by the Lessor of
such Advance or (y) be advanced by the Lessor on the date of such
Advance to the Construction Agent or the Lessee to pay Property Costs,
as applicable. Notwithstanding that the Operative Agreements state that
Advances shall be directed to the Lessor, each Advance shall in fact be
directed to the Agent (for the benefit of the Lessor) and applied by
the Agent (for the benefit of the Lessor) pursuant to the requirements
imposed on the Lessor under the Operative Agreements. The Construction
Agent or the Lessee, as the case may be, may retain up to five percent
(5%) of any Advance to the extent such retained amount is thereafter
applied to the Property Cost of the applicable Property on or prior to
the date of the next Advance regarding such Property and in any event
such amount shall be applied prior to the Expiration Date.
(d) With respect to an Advance obtained by the Lessor to pay
for Property Costs and/or Transaction Expenses or other costs payable
under Section 7.1 hereof and not expended by the Lessor for such
purpose on the date of such Advance, such amounts shall be held by the
Lessor (or the Agent on behalf of the Lessor) until the applicable
closing date or, if such closing date does not occur within three (3)
Business Days of the date of the Lessor's receipt of such Advance,
shall be applied regarding the applicable Advance to repay the Lenders
and the Holders and, subject to the terms hereof, and of the Credit
Agreement and the Trust Agreement, shall remain available for future
Advances. Any such amounts held by the Lessor (or the Agent on behalf
of the Lessor) shall be subject to the lien of the Security Agreement.
(e) All Operative Agreements which are to be delivered to the
Lessor, the Agent, the Lenders or the Holders shall be delivered to the
Agent, on behalf of the Lessor, the Agent, the Lenders or the Holders,
and such items (except for Notes, Certificates and chattel paper
originals, with respect to which in each case there shall be only one
original) shall be delivered with originals sufficient for the Lessor,
the Agent, each Lender and each Holder. All other items which are to be
delivered to the Lessor, the Agent, the Lenders or the Holders shall be
delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders
or the Holders, and such other items shall be held by the Agent. To the
extent any such other items are requested in writing from time to time
by the Lessor, any Lender or any Holder, the Agent shall provide a copy
of such item to the party requesting it.
(f) Notwithstanding the completion of any closing under this
Agreement pursuant to Sections 5.3 or 5.4, each condition precedent in
connection with any such closing may be subsequently enforced by the
Agent (unless such has been expressly waived in writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND
THE HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE ADVANCE
OF FUNDS FOR THE ACQUISITION OF A PROPERTY.
The obligations (i) on the Initial Closing Date of the Lessor, the
Agent, the Lenders and the Holders to enter into the transactions contemplated
by this Agreement, including without limitation the obligation to execute and
deliver the applicable Operative Agreements to which each is a party on the
Initial Closing Date, (ii) on the Initial Closing Date of the Holders to make
Holder Advances, and of the Lenders to make Loans in order to pay Transaction
Expenses, fees, expenses and other disbursements
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payable by the Lessor under Section 7.1(a) of this Agreement and (iii) on a
Property Closing Date for the purpose of providing funds to the Lessor necessary
to pay the Transaction Expenses, fees, expenses and other disbursements payable
by the Lessor under Section 7.1(b) of this Agreement and to acquire or ground
lease a Property (an "Acquisition Advance"), in each case (with regard to the
foregoing Sections 5.3(i), (ii) and (iii)) are subject to the satisfaction or
waiver of the following conditions precedent on or prior to the Initial Closing
Date or the applicable Property Closing Date, as the case may be (To the extent
such conditions precedent require the delivery of any agreement, certificate,
instrument, memorandum, legal or other opinion, appraisal, commitment, title
insurance commitment, lien report or any other document of any kind or type,
such shall be in form and substance satisfactory to the Agent, in its reasonable
discretion. Notwithstanding the foregoing, the obligations of each party shall
not be subject to any conditions contained in this Section 5.3 which are
required to be performed by such party.):
(a) the correctness of the representations and warranties
contained herein, in each of the other Operative Agreements and each
certificate delivered pursuant to any Operative Agreement (including
without limitation the Incorporated Representations and Warranties) on
each such date of the parties to this Agreement;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart
copy of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the
representations and warranties set forth in Section 6.3(l) hereof;
(e) the Construction Agent shall have delivered to the Agent a
good standing certificate for the Construction Agent in the state where
each such Property is located, the Deed with respect to the Land and
existing Improvements (if any), a copy of the Ground Lease (if any),
and a copy of the ▇▇▇▇ of Sale with respect to the Equipment (if any),
respecting such of the foregoing as are being acquired or ground leased
on each such date with the proceeds of the Loans and Holder Advances or
which have been previously acquired or ground leased with the proceeds
of the Loans and Holder Advances;
(f) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred after giving effect to the Advance requested by each
such Requisition;
(g) the Construction Agent shall have delivered to the Agent
title insurance commitments to issue policies respecting each such
Property in favor of the Lessor and the Agent from a title insurance
company acceptable to the Agent, with such title exceptions thereto as
are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the Agent a
Phase I environmental site assessment respecting each such Property
prepared by an independent recognized professional acceptable to the
Agent;
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(i) the Construction Agent shall have delivered to the Agent a
survey (with a flood hazard certification) respecting each such
Property prepared by an independent recognized professional acceptable
to the Agent;
(j) unless such an opinion has previously been delivered with
respect to a particular state, the Construction Agent shall have caused
to be delivered to the Agent a legal opinion in the form attached
hereto as EXHIBIT B or in such other form as is acceptable to the Agent
with respect to local law real property issues respecting the state in
which each such Property is located addressed to the Lessor, the Agent,
the Lenders and the Holders, from counsel located in the state where
each such Property is located, prepared by counsel acceptable to the
Agent;
(k) the Agent shall be satisfied that the acquisition, ground
leasing and/or holding of each such Property and the execution of the
Mortgage Instrument and the other Security Documents will not
materially and adversely affect the rights of the Lessor, the Agent,
the Holders or the Lenders under or with respect to the Operative
Agreements;
(l) the Construction Agent shall have delivered to the Agent
invoices for, or other reasonably satisfactory evidence of, the various
Transaction Expenses and other fees, expenses and disbursements
referenced in Sections 7.1(a) or 7.1(b) of this Agreement, as
appropriate;
(m) the Construction Agent shall have caused to be delivered
to the Agent a Mortgage Instrument (in such form as is acceptable to
the Agent, with revisions as necessary to conform to applicable state
law), Lessor Financing Statements and Lender Financing Statements
respecting each such Property, all fully executed and in recordable
form;
(n) the Lessee shall have delivered to the Agent with respect
to each such Property a Lease Supplement and a memorandum (or short
form lease) regarding the Lease and such Lease Supplement (such
memorandum or short form lease to be in the form attached to the Lease
as EXHIBIT B or in such other form as is acceptable to the Agent, with
modifications as necessary to conform to applicable state law, and in
form suitable for recording);
(o) with respect to each Acquisition Advance, the sum of the
Available Commitment plus the Available Holder Commitment (after
deducting the Unfunded Amount, if any, and after giving effect to the
Acquisition Advance) will be sufficient to pay all amounts payable
therefrom;
(p) if any such Property is subject to a Ground Lease, the
Construction Agent shall have caused a lease memorandum (or short form
lease) to be delivered to the Agent for such Ground Lease;
(q) counsel (acceptable to the Agent) for the ground lessor of
each such Property subject to a Ground Lease shall have issued to the
Lessor, the Agent, the Lenders and the Holders, its opinion;
(r) the Construction Agent shall have delivered to the Agent a
preliminary Construction Budget for each such Property, if applicable;
(s) the Construction Agent shall have provided evidence to the
Agent of insurance with respect to each such Property as provided in
the Lease;
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(t) subject to Section 5.5 of this Agreement, the
Construction Agent shall have caused an Appraisal regarding each such
Property to be provided to the Agent from an appraiser satisfactory to
the Agent;
(u) all necessary (or in the opinion of the Agent or its
counsel, advisable) Governmental Actions with respect to each such
Property, in each case required by any law or regulation enacted,
imposed or adopted on or prior to each such date or by any change in
facts or circumstances on or prior to each such date, shall have been
obtained or made and be in full force and effect;
(v) the Construction Agent shall cause (i) Uniform Commercial
Code lien searches, tax lien searches and judgment lien searches
regarding the Lessee to be conducted (and copies thereof to be
delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company acceptable to the Agent
and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled in
a manner satisfactory to the Agent;
(w) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the
Operative Agreements and/or documents related thereto shall have been
paid or provisions for such payment shall have been made to the
satisfaction of the Agent;
(x) no action or proceeding shall have been instituted, nor
shall any action or proceeding be overtly threatened, before any
Governmental Authority, nor shall any order, judgment or decree have
been issued or proposed to be issued by any Governmental Authority or
to set aside, restrain, enjoin or prevent the full performance of this
Agreement, any other Operative Agreement or any transaction
contemplated hereby or thereby which, individually or in the aggregate,
has or could reasonably be expected to have a Material Adverse Effect;
(y) in the opinion of the Agent and its respective counsel,
the transactions contemplated by the Operative Agreements do not and
will not violate any Legal Requirements and do not and will not subject
the Lessor, the Lenders, the Agent or the Holders to any adverse
regulatory prohibitions, constraints, penalties or fines;
(z) each of the Operative Agreements to be entered into on
such date shall have been duly authorized, executed and delivered by
the parties thereto, and shall be in full force and effect, and the
Agent shall have received a fully executed copy of each of the
Operative Agreements;
(aa) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate, dated as of the Initial Closing
Date, of the Lessee in the form attached hereto as EXHIBIT D or in such
other form as is acceptable to the Agent stating that (i) each and
every representation and warranty of each Credit Party contained in the
Operative Agreements to which it is a party is true and correct on and
as of the Initial Closing Date; (ii) no Default or Event of Default has
occurred and is continuing under any Operative Agreement; (iii) each
Operative Agreement to which any Credit Party is a party is in full
force and effect with respect to it; and (iv) each Credit Party has
duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to
be performed or complied with by it on or
12
prior to the Initial Closing Date;
(bb) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary or an Assistant Secretary
of each Credit Party, dated as of the Initial Closing Date, in the form
attached hereto as EXHIBIT E or in such other form as is acceptable to
the Agent attaching and certifying as to (1) the resolutions of the
Board of Directors of such Credit Party duly authorizing the execution,
delivery and performance by such Credit Party of each of the Operative
Agreements to which it is or will be a party, (2) the articles of
incorporation of such Credit Party certified as of a recent date by the
Secretary of State of its state of incorporation and its by-laws and
(3) the incumbency and signature of persons authorized to execute and
deliver on behalf of such Credit Party the Operative Agreements to
which it is or will be a party and (ii) a good standing certificate (or
local equivalent) from the respective states where such Credit Party is
incorporated and where the principal place of business of such Credit
Party is located as to its good standing in each such state;
(cc) as of the Initial Closing Date only, there shall not have
occurred any material adverse change in the consolidated assets,
liabilities, operations, business or condition (financial or otherwise)
of the Guarantors (on a consolidated basis) from that set forth in the
most recent audited consolidated financial statements of the Guarantors
which have been provided to the Agent;
(dd) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate of the Lessor dated as of the Initial
Closing Date in the form attached hereto as EXHIBIT F or in such other
form as is acceptable to the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date, (ii) each Operative Agreement to which the Lessor
is a party is in full force and effect with respect to it and (iii) the
Lessor has duly performed and complied with all covenants, agreements
and conditions contained herein or in any Operative Agreement required
to be performed or complied with by it on or prior to the Initial
Closing Date;
(ee) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary, an Assistant Secretary,
Trust Officer or Vice President of the Trust Company in the form
attached hereto as EXHIBIT G or in such other form as is acceptable to
the Agent, attaching and certifying as to (A) the signing resolutions
duly authorizing the execution, delivery and performance by the Lessor
of each of the Operative Agreements to which it is or will be a party,
(B) its articles of association or other equivalent charter documents
and its by-laws, as the case may be, certified as of a recent date by
an appropriate officer of the Trust Company and (C) the incumbency and
signature of persons authorized to execute and deliver on its behalf
the Operative Agreements to which it is a party and (ii) a good
standing certificate from the Office of the Comptroller of the
Currency;
(ff) as of the Initial Closing Date only, counsel for the
Lessor acceptable to the Agent shall have issued to the Lessee, the
Holders, the Lenders and the Agent its opinion in the form attached
hereto as EXHIBIT H or in such other form as is reasonably acceptable
to the Agent;
(gg) as of the Initial Closing Date only, the Construction
Agent shall have caused to be delivered to the Agent a legal opinion in
the form attached
13
hereto as EXHIBIT I or in such other form as is acceptable to the
Agent, addressed to the Lessor, the Agent, the Lenders and the Holders,
from counsel acceptable to the Agent; and
(hh) as of the Initial Closing Date only, the Construction
Agent shall cause (i) tax lien searches and judgment lien searches
regarding each Credit Party to be conducted (and copies thereof to be
delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company acceptable to the Agent
and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled in
a manner satisfactory to the Agent.
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND
THE HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE ACQUISITION
ADVANCE.
The obligations of the Holders to make Holder Advances, and the Lenders
to make Loans in connection with all requests for Advances subsequent to the
acquisition of a Property including without limitation amounts respecting
Section 11.1(c) of the Lease (and to pay the Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Section 7.1 of this
Agreement in connection therewith) are subject to the satisfaction or waiver of
the following conditions precedent (To the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion.
Notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.4 which are required to be
performed by such party.):
(a) the correctness on such date of the representations and
warranties contained herein, in each of the other Operative Agreements
and each certificate delivered pursuant to any Operative Agreement
(including without limitation the Incorporated Representations and
Warranties) of the parties to this Agreement;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed
counterpart of the Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which shall
satisfy the requirements of this Agreement, the Available Commitments
and the Available Holder Commitment (after deducting the Unfunded
Amount) will be sufficient to complete the Improvements;
(e) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred after giving effect to the Construction Advance
requested by the applicable Requisition;
(f) the title insurance policy delivered in connection with
the requirements of Section 5.3(g) shall provide for (or shall be
endorsed to provide for) insurance in an amount at least equal to the
maximum total Property Cost
14
indicated by the Construction Budget referred to in subparagraph (d)
above and there shall be no title change or exception objectionable to
the Agent;
(g) the Construction Agent shall have delivered to the Agent
copies of the Plans and Specifications for the applicable Improvements
or, respecting Section 11.1(c) of the Lease, the Lessee shall have
delivered to the Agent documentation describing each applicable
Modification;
(h) the Construction Agent shall have delivered to the Agent
invoices for, or other reasonably satisfactory evidence of, any
Transaction Expenses and other fees, expenses and disbursements
referenced in Section 7.1(b) that are to be paid with the Advance;
(i) all consents, licenses, permits, authorizations,
assignments and building permits required as of such date by all Legal
Requirements or pursuant to the terms of any contract, indenture,
instrument or agreement for the acquisition, ownership, construction,
completion, occupancy, operation, leasing or subleasing of each such
Property shall have been obtained and shall be in full force and
effect, except to the extent that the failure to so obtain any such
item at such time, individually or in the aggregate, shall not and
could not reasonably be expected to have a Material Adverse Effect;
(j) the Construction Agent or the Lessee, as the case may be,
shall have delivered, or caused to be delivered to the Agent, invoices,
Bills of Sale or other documents acceptable to the Agent, in each case
with regard to any Equipment or other components of such Property then
being acquired with the proceeds of the Loans and Holder Advances and
naming the Lessor as purchaser and transferee;
(k) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the
Operative Agreements shall have been paid or provisions for such
payment shall have been made to the satisfaction of the Agent;
(l) all necessary (or in the opinion of the Agent or its
counsel, advisable) Governmental Actions, in each case required by any
law or regulation enacted, imposed or adopted on or prior to the date
hereof or by any change in fact or circumstances on or prior to the
date hereof, shall have been obtained or made and be in full force and
effect;
(m) no action or proceeding shall have been instituted, nor
shall any action or proceeding be overtly threatened, before any
Governmental Authority, nor shall any order, judgment or decree have
been issued or proposed to be issued by any Governmental Authority or
to set aside, restrain, enjoin or prevent the full performance of this
Agreement, any other Operative Agreement or any transaction
contemplated hereby or thereby which, individually or in the aggregate,
has or could reasonably be expected to have a Material Adverse Effect;
and
(n) in the opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will
not violate any Legal Requirements and do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any adverse regulatory
prohibitions, constraints, penalties or fines.
15
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION DATE
AND ON CONSTRUCTION PERIOD TERMINATION DATE.
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as EXHIBIT J or in such other form as is acceptable to the Agent
specifying (a) the address for such Property, (b) the Completion Date for such
Property, (c) the aggregate Property Cost for such Property, (d) detailed,
itemized documentation supporting the asserted Property Cost figures, (e) all
Improvements have been made in accordance with all applicable Legal
Requirements, in a good and workmanlike manner and otherwise in full compliance
with the standards and practices of the Construction Agent with respect to
properties and improvements owned by the Construction Agent (except, in each
case, to the extent that deviation from the foregoing requirements and/or
standards, individually or in the aggregate, shall not and could not be
reasonably expected to have a Material Adverse Effect), (f) all Equipment (if
any) that has been acquired with the proceeds of the Loans and Holder Advances
has been installed and is operational and all Improvements have been made in
accordance with all applicable Legal Requirements in a good and workmanlike
manner in accordance with the Plans and Specifications (except to the extent
that any deviation from the Plans and Specifications could not reasonably be
expected to impair the value, utility, economic life or operation of such
Property) and otherwise in full compliance with the standards and practices of
the Construction Agent with respect to equipment, properties and improvements
owned by the Construction Agent and (g) all consents, licenses, permits,
authorizations, assignments and building permits required as of such date by all
Legal Requirements or pursuant to the terms of any contract, indenture,
instrument or agreement for the acquisition, ownership, construction,
completion, occupancy, operation, leasing or subleasing of such Property have
been obtained and are in full force and effect, except to the extent that the
failure to so obtain, individually or in the aggregate, shall not and could not
reasonably be expected to have a Material Adverse Effect. The Agent shall have
the right to contest the information contained in such Officer's Certificate.
Furthermore, on or prior to the Completion Date for each Property, the
Construction Agent shall deliver or cause to be delivered to the Agent (unless
previously delivered to the Agent) originals of the following, each of which
shall be in form and substance acceptable to the Agent, in its reasonable
discretion: (u) a title insurance endorsement regarding the title insurance
policy delivered in connection with the requirements of Section 5.3(g), but only
to the extent such endorsement is necessary to provide for insurance in an
amount at least equal to the maximum total Property Cost and, if endorsed, the
endorsement shall not include a title change or exception objectionable to the
Agent, (v) an as-built survey for such Property, (w) insurance certificates
respecting such Property as required hereunder and under the Lease Agreement,
(x) a memorandum (or short form) of the Lease and such Lease Supplement (in form
suitable for recording), (y) if requested by the Agent, amendments to the Lessor
Financing Statements executed by the appropriate parties and (z) an Appraisal
regarding such Property provided, however, such an Appraisal shall not be
required if, as of such Completion Date, the Agent has previously received
Appraisal(s) pursuant to Section 5.3(t) for Properties that are then subject to
the Lease and that have an aggregate value (as established by such Appraisal(s))
of at least $30,000,000. In addition, on the Completion Date for such Property
the Construction Agent covenants and agrees that the recording fees, documentary
stamp taxes or similar amounts required to be paid in connection with the
related Mortgage Instrument shall be paid in an amount required by applicable
law, subject, however, to the obligations of the Lenders and the Holders to fund
such costs to the extent required pursuant to Section 7.1.
16
6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET
MODIFICATIONS.
The Construction Agent covenants and agrees to deliver to the Agent
each month notification of any modification to any Construction Budget regarding
any Property if such modification increases the cost to construct such Property;
provided no Construction Budget may be increased unless (a) the title insurance
policies referenced in Section 5.3(g) are also modified or endorsed, if
necessary, to provide for insurance in an amount that satisfies the requirements
of Section 5.4(f) of this Agreement and (b) after giving effect to any such
amendment, the Construction Budget remains in compliance with the requirements
of Section 5.4(d) of this Agreement.
5.7. RESTRICTIONS ON LIENS.
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.3(q)(i) and 6.3(q)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than (a) Lessor Liens, (b) such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved by the Agent and (c) Liens pursuant to Section 8.5
with respect to such Property which have been requested by Lessee and approved
by the Agent).
5.8 ADDITIONAL AVAILABILITY UNDER COMMITMENTS AND HOLDER
COMMITMENTS.
To the extent the Lessee exercises its Purchase Option and purchases
one or more Properties from time to time prior to the Expiration Date, an amount
equal to that portion of the Property Cost for each Property so purchased
payable to (a) the Lenders shall be added ratably to the Available Commitment of
each Lender and (b) the Holders shall be added ratably to the Available Holder
Commitment of each Holder; provided, in no event shall the Available
Commitments, Commitments, Available Holder Commitments and/or the Holder
Commitments ever exceed the amounts therefor on the Initial Closing Date. All
amounts so added to the Available Commitments and the Available Holder
Commitments shall be available for Advances.
5.9 JOINDER AGREEMENT REQUIREMENTS.
Each Wholly-Owned Entity formed or acquired subsequent to the Initial
Closing Date shall become a Guarantor and shall satisfy the following conditions
within thirty (30) days after the formation or acquisition of such Wholly-Owned
Entity:
(a) such Wholly-Owned Entity shall execute and deliver to the
Agent a Joinder Agreement in the form attached hereto as EXHIBIT L;
(b) such Wholly-Owned Entity shall have delivered to the
Agent (x) an Officer's Certificate of such Wholly-Owned Entity in the
form attached hereto as EXHIBIT D, (y) a certificate of the Secretary
or an Assistant Secretary of such Wholly-Owned Entity in the form
attached hereto as EXHIBIT E and (z) good standing certificates (or
local equivalent) from the respective states where such Wholly-Owned
Entity is incorporated and where the principal place of business of
such Wholly-Owned Entity is located as to its good standing in each
such state;
(c) such Wholly-Owned Entity shall have delivered to the
Agent an
17
opinion of counsel (acceptable to the Agent) in the form attached
hereto as EXHIBIT I; and
(d) the Agent shall have received such other documents,
certificates and information as the Agent shall have reasonably
requested.
5.10 MAINTENANCE OF QUORUM ELF, INC. AS A WHOLLY-OWNED ENTITY.
From the Initial Closing Date and thereafter until such time as all
obligations of all Credit Parties under the Operative Agreements have been
satisfied and performed in full, Quorum shall retain the Lessee as a
Wholly-Owned Entity of Quorum.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. REPRESENTATIONS AND WARRANTIES OF THE HOLDERS.
Effective as of the Initial Closing Date and the date of each Advance,
each Holder severally as to itself, and not jointly, represents and warrants to
each of the other parties hereto that:
(a) It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation and has
the power and authority to carry on its business as now conducted and
to enter into and perform its obligations under each Operative
Agreement to which it is or is to be a party and each other agreement,
instrument and document to be executed and delivered by it on or before
each Closing Date in connection with or as contemplated by each such
Operative Agreement to which it is or will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party have 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) requires or will require any approval of stockholders of,
or approval or consent of any trustee or holder of any indebtedness or
obligations of, such Holder which have not been obtained, (ii)
contravenes or will contravene any Legal Requirement applicable to or
binding on it (except no representation or warranty is made as to any
Legal Requirement to which it may be subject solely as a result of the
activities of any Credit Party) as of the date hereof, (iii)
contravenes or will contravene or result in any breach of or constitute
any default under, or result in the creation of any Lien upon any
Property, any Equipment or any of the Improvements (other than Liens
created by the Operative Agreements) under its articles of
incorporation or other equivalent charter documents, as the case may
be, by-laws or any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement or
other agreement or instrument to which it is a party or by which it or
its properties is bound or affected or (iv) does or will require any
Governmental Action by any Governmental Authority (other than arising
solely by reason of the business, condition or activities of any Credit
Party or any Affiliate thereof or the construction or use of the
Properties, the Equipment or the Improvements);
(c) Each Operative Agreement to which it is or will be a
party has been, or will be, duly executed and delivered by it and
constitutes, or upon execution and delivery will constitute, a legal,
valid and binding obligation against it in accordance with the terms
thereof;
18
(d) There is no action or proceeding pending or, to its
knowledge, threatened against it before any Governmental Authority that
questions the validity or enforceability of any Operative Agreement to
which it is or will become a party or that, if adversely determined,
would materially and adversely affect its ability to perform its
obligations under the Operative Agreements to which it is a party;
(e) It has not assigned or transferred any of its right,
title or interest in or under the Lease, except in accordance with the
Operative Agreements;
(f) No Default or Event of Default under the Operative
Agreements attributable to it has occurred and is continuing;
(g) It is not a "holding company" or a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding company' or a
"public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or a "public utility" within the
meaning of the Federal Power Act, as amended. It is not an "investment
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act or an "investment adviser" within
the meaning of the Investment Advisers Act of 1940, as amended;
(h) Except as otherwise contemplated by the Operative
Agreements, it shall not, nor shall it direct the Lessor to, use the
proceeds of any Loan or Holder Advance for any purpose other than the
purchase and/or lease of the Properties, the acquisition, installation
and testing of the Equipment, the construction of Improvements and the
payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement
Date with respect to a particular Property; and
(i) It is acquiring its interest in the Trust Estate for its
own account for investment and not with a view to any distribution (as
such term is used in Section 2(11) of the Securities Act) thereof, and
if in the future it should decide to dispose of its interest in the
Trust Estate, it understands that it may do so only in compliance with
the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder and any applicable state securities
laws. Neither it nor anyone authorized to act on its behalf has taken
or will take any action which would subject the issuance or sale of any
interest in the Property, the Trust Estate or the Lease to the
registration requirements of Section 5 of the Securities Act. No
representation or warranty contained in this Section 6.1(i) shall
include or cover any action or inaction of any Credit Party or any
Affiliate thereof whether or not purportedly on behalf of the Holders,
the Borrower or any of their Affiliates.
6.2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
Effective as of the Initial Closing Date and the date of each Advance,
the Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
are made solely in its capacity as the Borrower:
19
(a) It is a national banking association and is duly organized
and validly existing and in good standing under the laws of the United
States of America and has the power and authority to enter into and
perform its obligations under the Trust Agreement and (assuming due
authorization, execution and delivery of the Trust Agreement by the
Holders) has the corporate and trust power and authority to act as the
Owner Trustee and to enter into and perform the obligations under each
of the other Operative Agreements to which the Trust Company or the
Owner Trustee, as the case may be, is or will be a party and each other
agreement, instrument and document to be executed and delivered by it
on or before such Closing Date in connection with or as contemplated by
each such Operative Agreement to which the Trust Company or the Owner
Trustee, as the case may be, is or will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) as the Owner Trustee, as the case may
be, 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 Legal Requirement
relating to its banking or trust powers, (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, (A) its
charter or by-laws, or (B) any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or 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, which
contravention, breach, default or Lien under clause (B) would
materially and adversely affect its ability, in its individual capacity
or as the Owner Trustee, to perform its obligations under the Operative
Agreements to which it is a party or (iv) does or will require any
Governmental Action by any Governmental Authority regulating its
banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is
the legal, valid and binding obligation of the Holders, each other
Operative Agreement to which the Trust Company or the Owner Trustee, as
the case may be, is or will be a party have been, or on or before such
Closing Date will be, duly executed and delivered by the Trust Company
or the Owner Trustee, as the case may be, and the Trust Agreement and
each such other Operative Agreement to which the Trust Company or the
Owner Trustee, as the case may be, is a party constitutes, or upon
execution and delivery will constitute, a legal, valid and binding
obligation enforceable against the Trust Company or the Owner Trustee,
as the case may be, in accordance with the terms thereof;
(d) There is no action or proceeding pending or, to its
knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental
Authority that, if adversely determined, would materially and adversely
affect its ability, in its individual capacity or as the Owner Trustee,
to perform its obligations under the Operative Agreements to which it
is a party or would question the validity or enforceability of any of
the Operative Agreements to which it is or will become a party;
(e) It has not assigned or transferred any of its right, title
or interest in or under the Lease, the Agency Agreement or its interest
in any Property or any
20
portion thereof, except in accordance with the Operative Agreements;
(f) No Default of Event of Default under the Operative
Agreements attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative
Agreements, the proceeds of the Loans and Holder Advances shall not be
applied by the Owner Trustee for any purpose other than the purchase
and/or lease of the Properties, the acquisition, installation and
testing of the Equipment, the construction of Improvements and the
payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement
Date with respect to a particular Property;
(h) Neither the Owner Trustee nor any Person authorized by the
Owner Trustee to act on its behalf has offered or sold any interest in
the Trust Estate or the Notes, or in any similar security relating to a
Property, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as
the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person other than, in the
case of the Notes, the Agent, and neither the Owner Trustee nor any
Person authorized by the Owner Trustee to act on its behalf will take
any action which would subject, as a direct result of such action
alone, the issuance or sale of any interest in the Trust Estate or the
Notes to the provisions of Section 5 of the Securities Act or require
the qualification of any Operative Agreement under the Trust Indenture
Act of 1939, as amended;
(i) The Owner Trustee's principal place of business, chief
executive office and office where the documents, accounts and records
relating to the transactions contemplated by this Agreement and each
other Operative Agreement are kept are located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇;
(j) The Owner Trustee is not engaged principally in, and does
not have as one (1) 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 of Governors of
the Federal Reserve System of the United States), and no part of the
proceeds of the Loans or the Holder Advances 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 G, T, U, or X of the Board of Governors of the Federal
Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a
company controlled by an "investment company" within the meaning of the
Investment Company Act;
(l) Each Property is free and clear of all Lessor Liens
attributable to the Owner Trustee in its individual capacity; and
(m) The Owner Trustee, in its trust capacity, is a party to no
documents, instruments or agreements other than the Operative
Agreements to which it is a party and any other documents delivered by
the Owner Trustee in connection with the Operative Agreements.
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6.3. REPRESENTATIONS AND WARRANTIES OF EACH CREDIT PARTY.
Effective as of the Initial Closing Date, the date of each Advance, the
date each Wholly-Owned Entity delivers a Joinder Agreement and the Rent
Commencement Date, each Credit Party represents and warrants to each of the
other parties hereto that:
(a) The Incorporated Representations and Warranties are true
and correct (unless such relate solely to an earlier point in time) and
the Lessee has delivered to the Agent the financial statements and
other reports referred to in Article VII of the Lessee Credit
Agreement;
(b) The execution and delivery by each Credit Party of this
Agreement and the other applicable Operative Agreements as of such date
and the performance by each Credit Party of its respective obligations
under this Agreement and the other applicable Operative Agreements are
within the corporate powers of each Credit Party, have been duly
authorized by all necessary corporate action on the part of each Credit
Party (including without limitation any necessary shareholder action),
have been duly executed and delivered, have received all necessary
governmental approval, and do not and will not (i) violate any Legal
Requirement which is binding on any Credit Party or any of their
Subsidiaries, (ii) contravene or conflict with, or result in a breach
of, any provision of the Articles of Incorporation, By-Laws or other
organizational documents of any Credit Party or any of their
Subsidiaries or of any agreement, indenture, instrument or other
document which is binding on any Credit Party or any of their
Subsidiaries or (iii) result in, or require, the creation or imposition
of any Lien (other than pursuant to the terms of the Operative
Agreements) on any asset of any Credit Party or any of their
Subsidiaries;
(c) This Agreement and the other applicable Operative
Agreements executed prior to and as of such date by any Credit Party,
constitute the legal, valid and binding obligation of such Credit
Party, as applicable, enforceable against such Credit Party, as
applicable, in accordance with their terms. Each Credit Party has
executed the various Operative Agreements required to be executed by
such Credit Party as of such date;
(d) Except as described in EXHIBIT K, there are no material
actions, suits or proceedings pending or to our knowledge, threatened
against any Credit Party in any court or before any Governmental
Authority, that concern any Property or any Credit Party's interest
therein or that question the validity or enforceability of any
Operative Agreement to which any Credit Party is a party or the overall
transaction described in the Operative Agreements to which any Credit
Party is a party or that have or could reasonably be expected to have a
Material Adverse Effect;
(e) No Governmental Action by any Governmental Authority or
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person is required to authorize or is
required in connection with (i) the execution, delivery or performance
of any Operative Agreement, (ii) the legality, validity, binding effect
or enforceability of any Operative Agreement, (iii) the acquisition,
ownership, construction or operation of the Properties or (iv) any
Advance, in each case, except those which have been obtained;
(f) Upon the execution and delivery of each Lease Supplement
to the
22
Lease, (i) the Lessee will have unconditionally accepted the Property
subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in such Property, subject only to the Permitted
Liens, and (ii) no offset will exist with respect to any Rent or other
sums payable under the Lease (except to the extent the rights of offset
may not be waived under the applicable state law);
(g) Except as otherwise contemplated by the Operative
Agreements, (i) the Construction Agent shall not use the proceeds of
any Holder Advance or Loan for any purpose other than the purchase
and/or lease of the Properties, the acquisition, installation and
testing of the Equipment, the construction of Improvements and the
payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement
Date with respect to a particular Property and (ii) the Lessee shall
not use the proceeds of any Holder Advance or Loan for any purpose
other than Modifications;
(h) All information heretofore or contemporaneously herewith
furnished by each Credit Party or their Subsidiaries to the Agent, the
Owner Trustee, any Lender or any Holder for purposes of or in
connection with this Agreement and the transactions contemplated hereby
is, and all information hereafter furnished by or on behalf of each
Credit Party or their Subsidiaries to the Agent, the Owner Trustee, any
Lender or any Holder pursuant hereto or in connection herewith will be,
true and accurate in every material respect on the date as of which
such information is dated or certified, and such information, taken as
a whole, does not and will not omit to state any material fact
necessary to make such information, taken as a whole, not misleading;
(i) The principal place of business, chief executive office
and office of the Construction Agent and the Lessee where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
kept are located at Wilmington, New Castle County, Delaware. The states
of incorporation/formation and the principal place of business of each
Guarantor are located in the states set forth on EXHIBIT M;
(j) The representations and warranties of each Credit Party
set forth in any of the Operative Agreements are true and correct in
all material respects on and as of the date of such Advance as if made
on and as of such date. Each Credit Party is in all material respects
in compliance with its obligations under the Operative Agreements and
there exists no Default or Event of Default under any of the Operative
Agreements which is continuing and which has not been cured within any
cure period expressly granted under the terms of the applicable
Operative Agreement or otherwise waived in accordance with the
applicable Operative Agreement. No Default or Event of Default will
occur under any of the Operative Agreements as a result of, or after
giving effect to, the Advance requested by the Requisition on the date
of such Advance;
(k) As of each Property Closing Date and the date of each
subsequent Advance only, each Property has been acquired or ground
leased pursuant to a Ground Lease at a price typically paid by Lessee
or its Affiliates for similar assets in its normal course of business,
and all Properties consist of (i) unimproved Land, or (ii) Land and
existing Improvements thereon which Improvements are either suitable
for occupancy at the time of acquisition or ground leasing or will be
renovated and/or modified in accordance with the terms of this
Agreement. Each Property is located at the location set forth on the
applicable Requisition;
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(l) As of each Property Closing Date and the date of each
subsequent Advance only, the Lessor has good and marketable fee simple
title to each Property, or, if any Property is the subject of a Ground
Lease, the Lessor will have a valid ground leasehold interest
enforceable against the ground lessor of such Property in accordance
with the terms of such Ground Lease, subject only to (i) such Liens
referenced in Sections 6.3(q)(i) and 6.3(q)(ii) on the applicable
Property Closing Date and (ii) subject to Section 5.7, Permitted Liens
after the applicable Property Closing Date;
(m) As of each Property Closing Date and the date of each
subsequent Advance only, no portion of any Property is located in an
area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, or if any such Property
is located in an area identified as a special flood hazard area by the
Federal Emergency Management Agency or other applicable agency, then
flood insurance has been obtained for such Property in accordance with
Section 14.2(b) of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended;
(n) As of each Property Closing Date and the date of each
subsequent Advance only, the Construction Agent has obtained insurance
coverage for each Property which meets the requirements of the Agency
Agreement and the Lease and all of such coverage is in full force and
effect;
(o) As of each Property Closing Date and the date of each
subsequent Advance only, each Property complies with all Legal
Requirements as of such date (including without limitation all zoning
and land use laws and Environmental Laws), except to the extent that
failure to comply therewith, individually or in the aggregate, shall
not and could not reasonably be expected to have a Material Adverse
Effect;
(p) As of each Property Closing Date and the date of each
subsequent Advance only, all utility services and facilities necessary
for the construction and operation of the Improvements and the
installation and operation of the Equipment regarding each Property
(including without limitation gas, electrical, water and sewage
services and facilities) are available at the applicable Land and will
be constructed prior to the Completion Date for such Property;
(q) (i) The Security Documents create, as security for the
Obligations (as such term is defined in the Security Agreement), valid
and enforceable security interests in, and Liens on, all of the
Collateral, in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements, and such security interests and Liens are subject
to no other Liens other than Liens that are expressly set forth as
title exceptions on the title commitment issued under Section 5.3(g)
with respect to the applicable Property, to the extent such title
commitment has been approved by the Agent. Upon recordation of the
Mortgage Instrument in the real estate recording office in the
applicable state identified by the Construction Agent or the Lessee,
the Lien created by the Mortgage Instrument in the real property
described therein shall be a perfected first priority mortgage Lien on
such real property in favor of the Agent, for the ratable benefit of
the Lenders and the Holders, as their respective interests appear in
the Operative Agreements. To the extent that the security interests in
the portion of the Collateral comprised of personal property can be
perfected by filing in the filing offices in the applicable states or
elsewhere
24
identified by the Construction Agent or the Lessee, upon filing of the
Lender Financing Statements in such filing offices, the security
interests created by the Security Agreement shall be perfected first
priority security interests in such personal property in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements;
(ii) The Lease Agreement creates, as security for the
obligations of the Lessee under the Lease Agreement, valid and
enforceable security interests in, and Liens on, each Property leased
thereunder, in favor of the Lessor, and such security interests and
Liens are subject to no other Liens other than Liens that are expressly
set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to the applicable Property, to the extent
such title commitment has been approved by the Agent. Upon recordation
of the memorandum of the Lease Agreement and the memorandum of a Ground
Lease (or, in either case, a short form lease) in the real estate
recording office in the applicable state identified by the Construction
Agent or the Lessee, the Lien created by the Lease Agreement in the
real property described therein shall be a perfected first priority
mortgage Lien on such real property in favor of the Agent, for the
ratable benefit of the Lenders and the Holders, as their respective
interests appear in the Operative Agreements. To the extent that the
security interests in the portion of any Property comprised of personal
property can be perfected by the filing in the filing offices in the
applicable state or elsewhere identified by the Construction Agent or
the Lessee upon filing of the Lessor Financing Statements in such
filing offices, a security interest created by the Lease Agreement
shall be perfected first priority security interests in such personal
property in favor of the Lessor, which rights pursuant to the Lessor
Financing Statements are assigned to the Agent, for the ratable benefit
of the Lenders and the Holders, as their respective interests appear in
the Operative Agreements;
(r) In the aggregate on the Rent Commencement Date therefor,
each particular Property shall constitute (and for the duration of the
Term shall continue to constitute) all of the equipment, facilities,
rights, other personal property and other real property necessary or
appropriate to operate, utilize, maintain and control each Property for
its originally intended purpose in a commercially reasonable manner.
Furthermore, on the Rent Commencement Date therefor each Property shall
be capable of operating on an independent, stand alone basis;
(s) All consents, licenses, permits, authorizations,
assignments and building permits required as of such date by any
applicable Legal Requirement or pursuant to the terms of any contract,
indenture, instrument or agreement have been obtained and are in full
force and effect, except to the extent that the failure to so obtain,
individually or in the aggregate, shall not and could not reasonably be
expected to have a Material Adverse Effect;
(t) Each Property, as improved in accordance with the
applicable Plans and Specifications, shall comply as of the applicable
Completion Date with all Legal Requirements and Insurance Requirements
(including without limitation all zoning and land use laws and
Environmental Laws), except to the extent the failure to comply
therewith, individually or in the aggregate, shall not and could not
reasonably be expected to have a Material Adverse Effect. The Plans and
Specifications have been or (prior to the commencement of construction)
will be prepared in accordance with all applicable Legal Requirements
(including without limitation all applicable Environmental Laws and
building, planning, zoning and
25
fire codes), except to the extent the failure to comply therewith,
individually or in the aggregate, shall not and could not reasonably be
expected to have a Material Adverse Effect. Upon completion of the
Improvements for each Property in accordance with the applicable Plans
and Specifications, such Improvements will not encroach in any manner
onto any adjoining land (except as permitted by express written
easements, which have been approved by the Agent);
(u) As of each Property Closing Date and the date of each
subsequent Advance only, Acquisition, installation and testing of the
Equipment (if any) and construction of the Improvements (if any) to
such date have been performed in a good and workmanlike manner,
substantially in accordance with the applicable Plans and
Specifications and in compliance with all Insurance Requirements and
Legal Requirements, except to the extent noncompliance, individually or
in the aggregate, with any Legal Requirement shall not and could not
reasonably be expected to have a Material Adverse Effect;
(v) When completed, the Equipment and the Improvements shall
be wholly within any building restriction lines and otherwise in
compliance with all Insurance Requirements and applicable Legal
Requirements (unless consented to by applicable Government Authorities
or where non-compliance, individually or in the aggregate, with any
Legal Requirement shall not and could not reasonably be expected to
have a Material Adverse Effect);
(w) As of the Initial Closing Date, each Wholly-Owned Entity
(formed prior to or on such date) shall have executed this Agreement in
its capacity as a Guarantor; and
(x) There are no Uniform Commercial Code filings of record in
any jurisdiction with respect to Lessee except such Uniform Commercial
Code filings as are required pursuant to the Operative Agreements.
6.4. REPRESENTATIONS AND WARRANTIES OF THE AGENT.
Effective as of the Initial Closing Date and the date of each Advance,
the Agent represents and warrants to each of the other parties hereto that:
(a) It is a national banking association duly organized and
validly existing under the laws of the United States of America and has
the full power and authority to enter into and perform its obligations
under this Agreement and each other Operative Agreement to which it is
or will be a party;
(b) This Agreement and each other Operative Agreement to
which it is a party have been, or when executed and delivered will be,
duly authorized by all necessary corporate action on the part of the
Agent and have been, or on such Closing Date will have been, duly
executed and delivered by the Agent and, assuming the due
authorization, execution and delivery hereof and thereof by the other
parties hereto and thereto, are, or upon execution and delivery thereof
will be, legal, valid and binding obligations of the Agent, enforceable
against it in accordance with their respective terms;
(c) The execution, delivery and performance by the Agent of
this Agreement and each other Operative Agreement to which it is or
will be a party do not, and will not contravene the articles of
association or by-laws or other charter documents of the Agent or any
applicable Law of the State of North
26
Carolina or of the United States of America governing its activities
and will not contravene any provision of, or constitute a default under
any indenture, mortgage, contract or other instrument of which it is a
party or by which it or its properties are bound, or require any
consent or approval of any Governmental Authority under any applicable
law, rule or regulation of the State of North Carolina or any federal
law, rule or regulation of the United States of America governing its
activities; and
(d) Except as otherwise contemplated by the Operative
Agreements, the Agent shall not, nor shall it direct the Lessor to, use
the proceeds of any Loan or Holder Advance, as the case may be, for any
purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the
construction of Improvements and the payment of Transaction Expenses
and the fees, expenses and other disbursements referenced in Sections
7.1(a) and 7.1(b) of this Agreement, in each case which accrue prior to
the Rent Commencement Date with respect to a particular Property.
SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Company Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed; provided, notwithstanding the foregoing, the
obligations of the Guarantors under this Section 6B shall not constitute a
direct guaranty of the indebtedness of the Lessor evidenced by the Notes but
rather a guaranty of the Company Obligations arising under the Operative
Agreements. This Section 6B is a guaranty of payment and performance and not of
collection and is a continuing guaranty and shall apply to all Company
Obligations whenever arising. All rights granted to the Financing Parties under
this Section 6B shall be subject to the provisions of Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
Each Guarantor agrees that the obligations of the Guarantors hereunder
are absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Operative Agreements, or
any other agreement or instrument referred to therein, or any substitution,
release or exchange of any other guarantee of or security for any of the Company
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor or
co-obligor, it being the intent of this Section 6B.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that this Section 6B may be enforced by the
Financing Parties without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the Notes, the Certificates or any other of the
Operative Agreements or any collateral, if any, hereafter securing the Company
Obligations or otherwise and each Guarantor hereby waives the right to require
the Financing Parties to proceed against the Construction Agent, the Lessee or
any other Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it hereby waives any and all right
27
of subrogation, indemnity, reimbursement or contribution against the Lessee and
the Construction Agent or any other Guarantor of the Company Obligations for
amounts paid under this Section 6B until such time as the Loans, Holder
Advances, accrued but unpaid interest, accrued but unpaid Holder Yield and all
other amounts owing under the Operative Agreements have been paid in full.
Without limiting the generality of the waiver provisions of this Section 6B,
each Guarantor hereby waives any rights to require the Financing Parties to
proceed against the Construction Agent, the Lessee or any co-guarantor or to
require Lessor to pursue any other remedy or enforce any other right, including
without limitation, any and all rights under N.C. Gen, Stat. ss. 26-7 through
26-9. Each Guarantor further agrees that nothing contained herein shall prevent
the Financing Parties from suing on any Operative Agreement or foreclosing any
security interest in or Lien on any collateral, if any, securing the Company
Obligations or from exercising any other rights available to it under any
Operative Agreement, or any other instrument of security, if any, and the
exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any Guarantor's obligations
hereunder; it being the purpose and intent of each Guarantor that its
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances; provided that any amounts due under this Section 6B which
are paid to or for the benefit of any Financing Party shall reduce the Company
Obligations by a corresponding amount (unless required to be rescinded at a
later date). Neither any Guarantor's obligations under this Section 6B nor any
remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Construction Agent or the Lessee
or by reason of the bankruptcy or insolvency of the Construction Agent or the
Lessee. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Company Obligations and notice of or proof of
reliance by any Financing Party upon this Section 6B or acceptance of this
Section 6B. The Company Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 6B. All dealings between the Construction Agent, the
Lessee and any of the Guarantors, on the one hand, and the Financing Parties, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Section 6B.
6B.3. MODIFICATIONS.
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Construction Agent, the Lessee and any other party liable for
payment under the Operative Agreements may be granted indulgences generally; (e)
any of the provisions of the Notes, the Certificates or any of the other
Operative Agreements may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Construction Agent, the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Company Obligations, all without notice to or further assent by
such Guarantor, which shall remain bound thereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal,
28
acceleration, modification, indulgence or release.
6B.4. WAIVER OF RIGHTS.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Company Obligations; (c) protest and notice of dishonor or of default with
respect to the Company Obligations or with respect to any security therefor; (d)
notice of any Financing Party obtaining, amending, substituting for, releasing,
waiving or modifying any security interest, lien or encumbrance, if any,
hereafter securing the Company Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which such Guarantor
might otherwise be entitled. Notwithstanding anything to the contrary herein,
(i) each Guarantor's payments hereunder shall be due five (5) Business Days
after written demand by the Agent for such payment (unless the Company
Obligations are automatically accelerated pursuant to the applicable provisions
of the Operative Agreements in which case the Guarantors' payments shall be
automatically due) and (ii) any modification of the Operative Agreements which
has the effect of increasing the Company Obligations shall not be enforceable
against a Guarantor unless such Guarantor executes the document evidencing such
modification or otherwise reaffirms its guaranty in writing in connection with
such modification.
6B.5. REINSTATEMENT.
The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Company Obligations is rescinded or
must be otherwise restored by any holder of any of the Company Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify each Financing Party
on demand for all reasonable costs and expenses (including, without limitation,
reasonable fees of counsel) incurred by any Financing Party in connection with
such rescission or restoration, including without limitation any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
6B.6. REMEDIES.
The Guarantors agree that, as between the Guarantors, on the one hand,
and each Financing Party, on the other hand, the Company Obligations may be
declared to be forthwith due and payable as provided in the applicable
provisions of the Operative Agreements (and shall be deemed to have become
automatically due and payable in the circumstances provided therein)
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Company Obligations from becoming automatically
due and payable) as against any other Person and that, in the event of such
declaration (or such Company Obligations being deemed to have become
automatically due and payable), such Company Obligations (whether or not due and
payable by any other Person) shall forthwith become due and payable by the
Guarantors in accordance with the applicable provisions of the Operative
Agreements.
29
6B.7. LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in
any of the other Operative Agreements, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including without limitation
the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company
Obligations in full, regardless of the source of payment, the Guarantors'
obligations hereunder shall be deemed satisfied, discharged and terminated other
than indemnifications set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
Each Financing Party hereby instructs each Guarantor, and each
Guarantor hereby acknowledges and agrees, that until such time as the Loans and
the Holder Advances are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released any and all Rent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.
6B.9. RELEASE OF GUARANTORS.
Each Financing Party hereby agrees that (a) the Agent shall be
permitted to release any Guarantor from its guaranty obligations under this
Section 6B without the consent of any other Financing Party if the release is
granted in connection with a disposition by the applicable Credit Party of all
the shares of stock or partnership or other equity interest in such Guarantor
and such disposition is permitted pursuant to the applicable provisions of the
Operative Agreements and the Lessee Credit Agreement and (b) the Agent shall be
permitted to release any Guarantor from its guaranty obligations under this
Section 6B.9 without the consent of any other Financing Party if the release is
requested by Quorum in connection with a dissolution of the Guarantor, subject
to Quorum providing to the Agent written representations to the effect that such
Guarantor has no business operations and no assets.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. TRANSACTION EXPENSES.
(a) The Lessor agrees on the Initial Closing Date, to pay, or
cause to be paid, all Transaction Expenses arising from the Initial
Closing Date, including without limitation all reasonable fees,
expenses and disbursements of the various legal counsels for the Lessor
and the Agent in connection with the transactions contemplated by the
Operative Agreements and incurred in connection with such Initial
Closing Date, the initial fees and expenses of the Owner Trustee due
and payable on such Initial Closing Date, all fees, taxes and expenses
for the recording, registration and filing of documents and all other
reasonable fees, expenses and disbursements incurred in connection with
such Initial Closing
30
Date; provided, however, the Lessor shall pay such amounts described in
this Section 7.1(a) only if (i) such amounts are properly described in
a Requisition delivered on or before the Initial Closing Date, and (ii)
funds are made available by the Lenders and the Holders in connection
with such Requisition in an amount sufficient to allow such payment. On
the Initial Closing Date after delivery and receipt of the Requisition
referenced in Section 4.2(a) hereof and satisfaction of the other
conditions precedent for such date, the Holders shall make Holder
Advances and the Lenders shall make Loans to the Lessor to pay for the
Transaction Expenses, fees, expenses and other disbursements referenced
in this Section 7.1(a). The Lessee agrees to timely pay all amounts
referred to in this Section 7.1(a) to the extent not paid by the
Lessor.
(b) Assuming no Default or Event of Default shall have
occurred and be continuing and only for the period prior to the Rent
Commencement Date, the Lessor agrees on each Property Closing Date, on
the date of any Construction Advance and on the Completion Date to pay,
or cause to be paid, all Transaction Expenses including without
limitation all reasonable fees, expenses and disbursements of the
various legal counsels for the Lessor and the Agent in connection with
the transactions contemplated by the Operative Agreements and billed in
connection with such Advance or such Completion Date, all amounts
described in Section 7.1(a) of this Agreement which have not been
previously paid, the annual fees and reasonable out-of-pocket expenses
of the Owner Trustee, all fees, expenses and disbursements incurred
with respect to the various items referenced in Sections 5.3, 5.4
and/or 5.5 (including without limitation any premiums for title
insurance policies and charges for any updates to such policies) and
all other reasonable fees, expenses and disbursements in connection
with such Advance or such Completion Date including without limitation
all expenses relating to and all fees, taxes and expenses for the
recording, registration and filing of documents and during the
Commitment Period, all fees, expenses and costs referenced in Sections
7.3(a), 7.3(b), 7.3(d) and 7.4; provided, however, the Lessor shall pay
such amounts described in this Section 7.1(b) only if (i) such amounts
are properly described in a Requisition delivered on the applicable
date and (ii) funds are made available by the Lenders and the Holders
in connection with such Requisition in an amount sufficient to allow
such payment. On each Property Closing Date, on the date of any
Construction Advance or any Completion Date, after delivery of the
applicable Requisition and satisfaction of the other conditions
precedent for such date, the Holders shall make a Holder Advance and
the Lenders shall make Loans to the Lessor to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in this
Section 7.1(b). The Lessee agrees to timely pay all amounts referred to
in this Section 7.1(b) to the extent not paid by the Lessor.
7.2. [INTENTIONALLY OMITTED].
7.3. CERTAIN FEES AND EXPENSES.
The Lessee agrees to pay or cause to be paid (a) the initial and annual
Owner Trustee's fee and all reasonable expenses of the Owner Trustee and any
co-trustees (including without limitation reasonable counsel fees and expenses)
or any successor owner trustee and/or co-trustee, for acting as the owner
trustee under the Trust Agreement, (b) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in entering into any Lease Supplement and any future amendments,
modifications, supplements, restatements and/or replacements with respect to any
of the Operative Agreements, whether or not such Lease Supplement,
31
amendments, modifications, supplements, restatements and/or replacements are
ultimately entered into, or giving or withholding of waivers of consents hereto
or thereto, which have been requested by any Credit Party, the Agent, the
Lenders, the Holders or the Lessor, (c) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in connection with any exercise of remedies under any Operative Agreement
or any purchase of any Property by the Construction Agent, the Lessee or any
third party and (d) all reasonable costs and expenses incurred by the Credit
Parties, the Agent, the Lenders, the Holders or the Lessor in connection with
any transfer or conveyance of any Property, whether or not such transfer or
conveyance is ultimately accomplished.
7.4. UNUSED FEE.
During the Commitment Period, the Lessee agrees to pay or to cause to
be paid to the Agent for the account of (a) the Lenders, respectively, an unused
fee (the "Lender Unused Fee") equal to the product of the average daily
Available Commitment of each Lender during the Commitment Period multiplied by
the Applicable Percentage per annum and (b) the Holders, respectively, an unused
fee (the "Holder Unused Fee") equal to the product of the average daily
Available Holder Commitment of each Holder during the Commitment Period
multiplied by the Applicable Percentage per annum. Such Unused Fees shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed and shall be payable quarterly in arrears on each Unused Fee
Payment Date. If all or a portion of any such Unused Fee 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 ABR (or in the case of Holder Yield, the ABR
plus the Applicable Percentage for Eurodollar Holder Advances) plus two percent
(2%) from the date of such non-payment until such amount is paid in full (as
well as before judgment).
7.5. ADMINISTRATIVE FEE.
During the Term, the Lessee agrees to pay or to cause to be paid to the
Agent (for the account of the Agent) an administrative fee pursuant to the terms
of the engagement letter dated October 7, 1997 from First Union Capital Markets
Corp. to Quorum.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
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8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:
(a) Neither the Owner Trustee (in its trust capacity or in
its individual capacity) nor any Holder will create or permit to exist
at any time, and each of them will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, all Lessor Liens on the Properties attributable
to it; provided, however, that the Owner Trustee and the Holders 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 materially and
adversely affect the rights of the Lessee under the Lease and the other
Operative Agreements or involve any material danger of impairment of
the Liens of the Security Documents or of the sale, forfeiture or loss
of, and shall not interfere with the use or disposition of, any
Property or title thereto or any interest therein or the payment of
Rent;
(b) Without prejudice to any right under the Trust Agreement
of the Owner Trustee to resign (subject to requirement set forth in the
Trust Agreement that such resignation shall not be effective until a
successor shall have agreed to accept such appointment), or the
Holders' rights under the Trust Agreement to remove the institution
acting as the Owner Trustee (after consent to such removal by the Agent
as provided in the Trust Agreement), each of the Owner Trustee and the
Holders hereby agrees with the Lessee and the Agent (i) not to
terminate or revoke the trust created by the Trust Agreement except as
permitted by Article VIII of the Trust Agreement, (ii) not to amend,
supplement, terminate or revoke or otherwise modify any provision of
the Trust Agreement in such a manner as to adversely affect the rights
of any such party without the prior written consent of such party and
(iii) to comply with all of the terms of the Trust Agreement, the
nonperformance of which would adversely affect such party;
(c) The Owner Trustee or any successor may resign or be
removed by the Holders as the Owner Trustee, a successor Owner Trustee
may be appointed and a corporation may become the Owner Trustee under
the Trust Agreement, only in accordance with the provisions of Article
IX of the Trust Agreement and, with respect to such appointment, with
the consent of the Lessee, which consent shall not be unreasonably
withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner Trustee
under the Trust Agreement, and not in its individual capacity, shall
not contract for, create, incur or assume any Indebtedness, or enter
into any business or other activity or enter into any contracts or
agreements, other than pursuant to or under the Operative Agreements;
(e) The Holders will not instruct the Owner Trustee to take
any action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i)
commence any case, proceeding or other action with respect to the Owner
Trustee under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization,
arrangement, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official with respect to
the Owner Trustee or for all or any substantial benefit of the
creditors of the Owner Trustee; and neither any Holder nor the Owner
Trustee shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
in this paragraph;
33
(g) The Owner Trustee shall give prompt notice to the Lessee,
the Holders and the Agent if the Owner Trustee's principal place of
business or chief executive office, or the office where the records
concerning the accounts or contract rights relating to any Property are
kept, shall cease to be located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or if it shall change its name; and
(h) The Owner Trustee shall take or refrain from taking such
actions and grant or refrain from granting such approvals with respect
to the Operative Agreements and/or relating to any Property in each
case as directed in writing by the Agent (until such time as the Loans
are paid in full, and then by the Majority Holders) or, in connection
with Sections 8.5 and 9.2 hereof, the Lessee; provided, however, that
notwithstanding the foregoing provisions of this subparagraph (h) the
Owner Trustee, the Agent, the Lenders and the Holders each acknowledge,
covenant and agree that neither the Owner Trustee nor the Agent shall
act or refrain from acting, regarding each Unanimous Vote Matter, until
such party has received the approval of each Lender and each Holder
affected by such matter.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
(a) Each Credit Party acknowledges and agrees that the Owner
Trustee, pursuant to the terms and conditions of the Security Agreement
and the Mortgage Instruments, shall create Liens respecting the various
personal property, fixtures and real property described therein in
favor of the Agent. Each Credit Party hereby irrevocably consents to
the creation, perfection and maintenance of such Liens. Each Credit
Party shall, to the extent reasonably requested by any of the other
parties hereto, cooperate with the other parties in connection with
their covenants herein or in the other Operative Agreements and shall
from time to time duly execute and deliver any and all such future
instruments, documents and financing statements (and continuation
statements related thereto) as any other party hereto may reasonably
request.
(b) The Lessor hereby instructs each Credit Party, and each
Credit Party hereby acknowledges and agrees, that until such time as
the Loans and the Holder Advances are paid in full and the Liens
evidenced by the Security Agreement and the Mortgage Instruments have
been released (i) any and all Rent (excluding Excepted Payments which
shall be payable to each Holder or other Person as appropriate) and any
and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person shall instead be paid
directly to the Agent (excluding Excepted Payments which shall be
payable to each Holder or other Person as appropriate) or as the Agent
may direct from time to time for allocation and distribution in
accordance with the procedures set forth in Section 8.7 hereof, (ii)
all rights of the Lessor under the Lease shall be exercised by the
Agent and (iii) each Credit Party shall cause all notices,
certificates, financial statements, communications and other
information which are delivered, or are required to be delivered, to
the Lessor, to also to be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any amendment,
supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.5 of this
Agreement.
(d) Each Credit Party hereby covenants and agrees that,
except for amounts payable as Basic Rent, any and all payment
obligations owing from time
34
to time under the Operative Agreements by any Person to the Agent, any
Lender, any Holder or any other Person shall (without further action)
be deemed to be Supplemental Rent obligations payable by the Lessee and
guaranteed by the other Credit Parties. Without limitation, such
obligations of the Lessee shall include without limitation arrangement
fees, administrative fees, unused fees, breakage costs, indemnities,
trustee fees and transaction expenses incurred by the parties hereto in
connection with the transactions contemplated by the Operative
Agreements.
(e) The Lessee hereby covenants and agrees to cause an
Appraisal or reappraisal (in form and substance satisfactory to the
Agent and from an appraiser selected by the Agent) to be issued
respecting any Property as requested by the Agent from time to time as
requested by the Agent from time to time (i) at each and every time as
such shall be required to satisfy any regulatory requirements imposed
on the Agent, the Lessor, the Trust Company, any Lender and/or any
Holder and (ii) after the occurrence of an Event of Default.
(f) At any time the Lessor or the Agent is entitled under the
Operative Agreements to possession of a Property or any component
thereof, each of the Construction Agent and the Lessee hereby covenants
and agrees, at its own cost and expense, to assemble and make the same
available to the Agent (on behalf of the Lessor).
(g) The Lessee hereby covenants and agrees that Equipment
(constituting solely personal property which is not and shall at no
time become a fixture or otherwise be deemed to constitute real
property) respecting any individual parcel of Property shall at no time
constitute in excess of twenty percent (20%) of the aggregate Advances
respecting such parcel of Property funded at such time under the
Operative Agreements.
(h) The Lessee hereby covenants and agrees that as of
Completion (i) the Property Cost for each individual parcel of the
Property shall be (A) no less than $5,000,000 (except that up to five
(5) Properties may be purchased or constructed each having a Property
Cost of no less than $2,000,000 and no more than $5,000,000) and (B) no
more than $75,000,000 and (ii) each parcel of the Property shall be a
Facility.
(i) The Lessee hereby covenants and agrees that it shall give
prompt notice to the Agent if the Lessee's principal place of business
or chief executive office, or the office where the records concerning
the accounts or contract rights relating to any Property are kept,
shall cease to be located at the location referenced in Section 6.3(i)
or if it shall change its name.
(j) The Lessee hereby covenants and agrees that the aggregate
Property Cost of Properties purchased for any reason by the Lessee
pursuant to its Purchase Option prior to the Expiration Date shall not
exceed twenty-five percent (25%) of the aggregate Property Cost for all
Properties funded during the Commitment Period (regardless of whether
such Properties are then subject to the Lease).
(k) Until all the obligations of the Credit Parties under the
Operative Agreements have been finally and indefeasibly paid and
satisfied in full, the Commitments and the Holder Commitments
terminated and the Term has expired or been earlier terminated, then
unless consent has been obtained from the
35
Majority Secured Parties, the Lessee will furnish or cause to be
furnished to each Holder, each Lender and the Agent at their respective
addresses set forth or referenced in Section 12.3 of this Agreement, or
such other office as may be designated by any such Holder, Lender or
the Agent from time to time: (i) not later than forty-five (45) days
after the end of each fiscal quarter, a certificate duly signed by the
chief executive officer, chief operating officer, chief financial
officer, treasurer or controller of Quorum setting forth the Total
Leverage Ratio for the period of four (4) consecutive fiscal quarters
ending with such quarter-end and setting forth the computations
employed in calculating the ratio (the "Margin Certificate") and (ii)
at each time financial statements are delivered or to be delivered
pursuant to Section 28.1 of the Lease, a compliance certificate duly
executed by the president, treasurer, chief financial offer or
controller of Quorum substantially in the form of EXHIBIT N attached
hereto (the "Officer's Compliance Certificate").
(l) The Lessee hereby covenants and agrees that the rights of
the Lessee under this Agreement and the Lease shall not impair or in
any way diminish the obligations of the Construction Agent and/or the
rights of the Lessor under the Agency Agreement.
(m) Each Credit Party hereby covenants and agrees to cause
each Wholly-Owned Entity formed after the Initial Closing Date to
execute a Joinder Agreement and to observe the terms of Section 5.9 of
this Agreement, all within thirty (30) days of the formation of such
Wholly-Owned Entity.
(n) Each Credit Party shall promptly notify the Agent, or
cause the Agent to be promptly notified, upon such Credit Party gaining
knowledge of the occurrence of any Default or Event of Default which is
continuing at such time. In any event, such notice shall be provided to
the Agent within ten (10) days of when the Credit Party gains such
knowledge.
(o) Until all of the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in
full and the Commitments and the Holder Commitments terminated, unless
consent has been obtained from the Majority Secured Parties, each
Credit Party will:
(i) except as permitted by the express provisions of the
Lessee Credit Agreement, preserve and maintain its separate legal
existence and all rights, franchises, licenses and privileges necessary
to the conduct of its business, and qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction
in which the failure to so qualify would have a Material Adverse
Effect;
(ii) pay and perform all obligations of the Credit
Parties under the Operative Agreements and pay or perform (A) all
taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (B) all other
indebtedness, obligations and liabilities in accordance with customary
trade practices; which if not paid would have a Material Adverse
Effect; provided that any Credit Party may contest any item described
in this Section 8.3(o)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a
Material Adverse Effect, observe and remain in compliance with all
applicable Laws and maintain
36
in full force and effect all Governmental Actions, in each case
applicable to the conduct of its business; keep in full force and
effect all licenses, certifications or accreditations necessary for any
Facility to carry on its business; and not permit the termination of
any insurance reimbursement program available to any Facility; and
(iv) provided that the Agent, the Lenders and the
Holders use reasonable efforts to minimize disruption to the business
of the Credit Parties, permit representatives of the Agent or any
Lender or Holder, from time to time, to visit and inspect its
properties; inspect, audit and make extracts from its books, records
and files, including without limitation management letters prepared by
independent accountants; and discuss with its principal officers, and
its independent accountants, its business, assets, liabilities,
financial condition, results of operations and business prospects.
8.4. SHARING OF CERTAIN PAYMENTS.
Except for Excepted Payments, the parties hereto acknowledge and agree
that all payments due and owing by any Credit Party to the Lessor under the
Lease or any of the other Operative Agreements shall be made by such Credit
Party directly to the Agent as more particularly provided in Section 8.3 hereof.
The Lessor, the Holders, the Agent, the Lenders and the Credit Parties
acknowledge the terms of Section 8.7 of this Agreement regarding the allocation
of payments and other amounts made or received from time to time under the
Operative Agreements and agree, that all such payments and amounts are to be
allocated as provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
The Agent, the Lenders and the Holders hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Owner Trustee shall,
from time to time at the request of the Lessee (and with the prior consent of
the Agent), in connection with the transactions contemplated by the Agency
Agreement, the Lease or the other Operative Agreements, (i) grant easements and
other rights in the nature of easements with respect to any Property, (ii)
release existing easements or other rights in the nature of easements which are
for the benefit of any Property, (iii) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants or releases, and (iv)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development, construction, testing or operation
of any Property, including without limitation reciprocal easement agreements,
construction contracts, operating agreements, development agreements, plats,
replats or subdivision documents; provided, that each of the agreements referred
to in this Section 8.5 shall be of the type normally executed by the Lessee in
the ordinary course of the Lessee's business and shall be on commercially
reasonable terms so as not to diminish the value of any Property in any material
respect.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND
THE OWNER TRUSTEE.
The Holders hereby appoint the Agent to act as collateral agent for the
Holders in connection with the Lien granted by the Security Documents to secure
the Holder Amount. The Lenders and the Holders acknowledge and agree and direct
that the rights and remedies of the beneficiaries of the Lien of the Security
Documents shall be exercised by the Agent on behalf of the Lenders and the
Holders as directed from time to time by the Majority Secured Parties or,
pursuant to Sections 8.2(h) and 12.5, all of the
37
Lenders and the Holders, as the case may be; provided, in all cases, the Agent
shall allocate payments and other amounts received in accordance with Section
8.7. The Agent is further appointed to provide notices under the Operative
Agreements on behalf of the Owner Trustee (as determined by the Agent, in its
reasonable discretion), to receive notices under the Operative Agreements on
behalf of the Owner Trustee and (subject to Sections 8.5 and 9.2) to take such
other action under the Operative Agreements on behalf of the Owner Trustee as
the Agent shall determine in its reasonable discretion from time to time. The
Agent hereby accepts such appointments. For purposes hereof, the provisions of
Section 7 of the Credit Agreement, together with such other terms and provisions
of the Credit Agreement and the other Operative Agreements as required for the
full interpretation and operation of Section 7 of the Credit Agreement are
hereby incorporated by reference as if restated herein for the mutual benefit of
the Agent and each Holder as if each Holder were a Lender thereunder.
Outstanding Holder Advances and outstanding Loans shall each be taken into
account for purposes of determining Majority Secured Parties. Further, the Agent
shall be entitled to take such action on behalf of the Owner Trustee as is
delegated to the Agent under any Operative Agreement (whether express or
implied) as may be reasonably incidental thereto. The parties hereto hereby
agree to the provisions contained in this Section 8.6. Any appointment of a
successor agent under Section 7.9 of the Credit Agreement shall also be
effective as an appointment of a successor agent for purposes of this Section
8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
(a) Each Credit Party has agreed pursuant to the terms of
this Agreement to pay to (i) the Agent any and all Rent (excluding
Excepted Payments) and any and all other amounts of any kind or type
under any of the Operative Agreements due and owing or payable to any
Person and (ii) each Person as appropriate the Excepted Payments.
Promptly after receipt, the Agent shall apply and allocate, in
accordance with the terms of this Section 8.7, such amounts received
from any Credit Party and all other payments, receipts and other
consideration of any kind whatsoever received by the Agent pursuant to
the Security Agreement or otherwise received by the Agent, the Holders
or any of the Lenders in connection with the Collateral, the Security
Documents or any of the other Operative Agreements. Ratable
distributions among the Lenders and the Holders under this Section 8.7
shall be made based on (in the case of the Lenders) the ratio of the
outstanding Loans to the aggregate Property Cost and (in the case of
the Holders) the ratio of the outstanding Holder Advances to the
aggregate Property Cost. Ratable distributions among the Tranche A
Lenders under this Section 8.7 shall be made based on the ratio of the
individual Tranche A Lender's Commitment for Tranche A Loans to the
aggregate of all the Tranche A Lenders' Commitments for Tranche A
Loans. Ratable distributions among the Tranche B Lenders under this
Section 8.7 shall be made based on the ratio of the individual Tranche
B Lender's Commitment for Tranche B Loans to the aggregate of all the
Tranche B Lenders' Commitments for Tranche B Loans. Ratable
distributions among the Lenders (in situations where the Tranche A
Lenders are not differentiated from the Tranche B Lenders) shall be
made based on the ratio of the individual Lender's Commitment to the
aggregate of all the Lenders' Commitments. Ratable distributions among
the Holders under this Section 8.7 shall be based on the ratio of the
individual Holder's Holder Commitment to the aggregate of all the
Holders' Holder Commitments.
(b) Payments and other amounts received by the Agent from time
to time in accordance with the terms of subparagraph (a) shall be
applied and allocated as follows:
38
(i) Any such payment or amount identified as or deemed
to be Basic Rent shall be applied and allocated by the Agent
first, ratably to the Lenders and the Holders for application
and allocation to the payment of interest on the Loans and
thereafter the principal of the Loans which is due and payable
on such date and to the payment of accrued Holder Yield with
respect to the Holder Advances and thereafter the portion of
the Holder Advances which is due on such date; and second, if
no Default or Event of Default is in effect, any excess shall
be paid to such Person or Persons as the Lessee may designate;
provided, that if a Default or Event of Default is in effect,
such excess (if any) shall instead be held by the Agent until
the earlier of (I) the first date thereafter on which no
Default or Event of Default shall be in effect (in which case
such payments or returns shall then be made to such other
Person or Persons as the Lessee may designate) and (II) the
Maturity Date or the Expiration Date, as the case may be (or,
if earlier, the date of any Acceleration), in which case such
amounts shall be applied and allocated in the manner
contemplated by Section 8.7(b)(iv).
(ii) If on any date the Agent or the Lessor shall receive
any amount in respect of (A) any Casualty or Condemnation
pursuant to Sections 15.1(a) or 15.1(g) of the Lease
(excluding any payments in respect thereof which are payable
to the Lessee in accordance with the Lease), or (B) the
Termination Value in connection with the delivery of a
Termination Notice pursuant to Article XVI of the Lease, or
(C) the Termination Value in connection with the exercise of
the Purchase Option under Section 20.1 of the Lease or the
exercise of the option of the Lessor to transfer the
Properties to the Lessee pursuant to Section 20.3 of the
Lease, or (D) any payment required to be made or elected to be
made by the Construction Agent to the Lessor pursuant to the
terms of the Agency Agreement, then in each case, the Lessor
shall be required to pay such amount received (1) if no
Acceleration has occurred, to prepay the principal balance of
the Loans and the Holder Advances, on a pro rata basis, a
portion of such amount to be distributed to the Lenders and
the Holders or (2) if an Acceleration has occurred, to apply
and allocate the proceeds respecting Sections 8.7(b)(ii)(A)
through 8.7(b)(ii)(D) in accordance with Section 8.7(b)(iii)
hereof.
(iii) Subject to Section 8.7(c), an amount equal to any
payment identified as proceeds of the sale or other
disposition (or lease upon the exercise of remedies) of the
Properties or any portion thereof, whether pursuant to Article
XXII of the Lease or the exercise of remedies under the
Security Documents or otherwise, the execution of remedies set
forth in the Lease and any payment in respect of excess wear
and tear pursuant to Section 22.3 of the Lease (whether such
payment relates to a period before or after the Construction
Period Termination Date) shall be applied and allocated by the
Agent first, ratably to the payment of the principal and
interest of the Tranche B Loans then outstanding, second,
ratably to the payment to the Holders of the outstanding
principal balance of all Holder Advances plus all outstanding
Holder Yield with respect to such outstanding Holder Advances,
third, to the extent such amount exceeds the maximum amount to
be returned pursuant to the foregoing provisions of this
paragraph (iii), ratably to the payment of the principal and
interest of the Tranche A Loans then outstanding, fourth, to
any and all other amounts owing under the Operative Agreements
to the Lenders under the
39
Tranche B Loans, fifth, to any and all other amounts owing
under the Operative Agreements to the Holders, sixth, to any
and all other amounts owing under the Operative Agreements to
the Lenders under the Tranche A Loans, and seventh, to the
extent moneys remain after application and allocation pursuant
to clauses first through sixth above, to the Owner Trustee for
application and allocation to any and all other amounts owing
to the Holders or the Owner Trustee and as the Holders shall
determine; provided, where no Event of Default shall exist and
be continuing and a prepayment is made for any reason with
respect to less than the full amount of the outstanding
principal amount of the Loans and the outstanding Holder
Advances, the proceeds shall be applied and allocated ratably
to the Lenders and to the Holders.
(iv) Subject to Section 8.7(c), an amount equal to (A)
any such payment identified as a payment pursuant to Section
22.1(b) of the Lease (or otherwise) of the Maximum Residual
Guarantee Amount (and any such lesser amount as may be
required by Section 22.1(b) of the Lease) in respect of the
Properties, (B) any other amount payable upon any exercise of
remedies after the occurrence of an Event of Default not
covered by Sections 8.7(b)(i) or 8.7(b)(iii) above (including
without limitation any amount received in connection with an
Acceleration which does not represent proceeds from the sale
or liquidation of the Properties) and (C) any other amount
payable by any Guarantor pursuant to Section 6B shall be
applied and allocated by the Agent first, ratably, to the
payment of the principal and interest balance of Tranche A
Loans then outstanding, second, ratably to the payment of the
principal and interest balance of the Tranche B Loans then
outstanding, third, ratably to the payment of the principal
balance of all Holder Advances plus all outstanding Holder
Yield with respect to such outstanding Holder Advances,
fourth, to the payment of any other amounts owing to the
Lenders hereunder or under any of the other Operative
Agreement, and fifth, to the extent moneys remain after
application and allocation pursuant to clauses first through
fourth above, to the Owner Trustee for application and
allocation to Holder Advances and Holder Yield and any other
amounts owing to the Holders or the Owner Trustee as the
Holders shall determine.
(v) An amount equal to any such payment identified as
Supplemental Rent shall be applied and allocated by the Agent
to the payment of any amounts then owing to the Agent, the
Lenders, the Holders and the other parties to the Operative
Agreements (or any of them) (other than any such amounts
payable pursuant to the preceding provisions of this Section
8.7(b)) as shall be determined by the Agent in its reasonable
discretion; provided, however, that Supplemental Rent received
upon the exercise of remedies after the occurrence and
continuance of an Event of Default in lieu of or in
substitution of the Maximum Residual Guarantee Amount or as a
partial payment thereon shall be applied and allocated as set
forth in Section 8.7(b)(iv).
(vi) The Agent in its reasonable judgment shall identify
the nature of each payment or amount received by the Agent and
apply and allocate each such amount in the manner specified
above.
(c) Upon the termination of the Commitments and the payment in
full of the Loans and all other amounts owing by the Owner Trustee
hereunder or
40
under any Credit Document and the payment in full of all amounts owing
to the Holders and the Owner Trustee under the Trust Agreement, any
moneys remaining with the Agent shall be returned to the Owner Trustee
or such other Person or Persons as the Holders may designate for
application and allocation to any and all other amounts owing to the
Holders or the Owner Trustee and as the Holders shall determine. In the
event of an Acceleration it is agreed that, prior to the application
and allocation of amounts received by the Agent in the order described
in Section 8.7(b) above, any such amounts shall first be applied and
allocated to the payment of (i) any and all sums advanced by the Agent
in order to preserve the Collateral or to preserve its Lien thereon,
(ii) the expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing or realizing on the Collateral, or of
any exercise by the Agent of its rights under the Security Documents,
together with reasonable attorneys' fees and expenses and court costs
and (iii) any and all other amounts reasonably owed to the Agent under
or in connection with the transactions contemplated by the Operative
Agreements (including without limitation any accrued and unpaid
administration fees).
8.8. RELEASE OF PROPERTIES, ETC.
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to prepay the Loans, Holder Advances and all other amounts owing to
the Lenders and the Holders under the Operative Agreements, the Agent is hereby
authorized and directed to release such Properties from the Liens created by the
Security Documents to the extent of its interest therein. In addition, upon the
termination of the Commitments and the Holder Commitments and the payment in
full of the Loans, the Holder Advances and all other amounts owing by the Owner
Trustee hereunder or under any other Operative Agreement the Agent is hereby
authorized and directed to release all of the Properties from the Liens created
by the Security Documents to the extent of its interest therein. Upon request of
the Owner Trustee following any such release, the Agent shall, at the sole cost
and expense of the Lessee, execute and deliver to the Owner Trustee and the
Lessee such documents as the Owner Trustee or the Lessee shall reasonably
request to evidence such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT
AGREEMENT RIGHTS.
Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Holders, the Credit Parties and the Owner
Trustee hereby agree that, prior to the occurrence and continuation of any
Default or Event of Default, the Construction Agent or the Lessee, as the case
may be, shall have the following rights:
(a) the right to designate an account to which amounts funded
under the Operative Agreements shall be credited pursuant to Section
2.3(a) of the Credit Agreement;
(b) the right to terminate or reduce the Commitments pursuant
to Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation
options pursuant to Section 2.7 of the Credit Agreement;
41
(d) the right to receive any notice and any certificate, in
each case issued pursuant to Section 2.11(a) of the Credit Agreement;
(e) the right to replace any Lender pursuant to Section
2.11(b) of the Credit Agreement;
(f) the right to approve any successor agent pursuant to
Section 7.9 of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to
which the Lessor has the right to consent pursuant to Section 9.8 of
the Credit Agreement.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT
RIGHTS.
Notwithstanding anything to the contrary contained in the Trust
Agreement, the Credit Parties, the Owner Trustee and the Holders hereby agree
that, prior to the occurrence and continuation of any Default or Event of
Default, the Construction Agent or the Lessee, as the case may be, shall have
the following rights:
(a) the right to exercise the conversion and continuation
options pursuant to Section 3.8 of the Trust Agreement;
(b) the right to receive any notice and any certificate, in
each case issued pursuant to Section 3.9(a) of the Trust Agreement;
(c) the right to replace any Holder pursuant to Section
3.9(b) of the Trust Agreement;
(d) the right to exercise the removal options contained in
Section 3.9 of the Trust Agreement; and
(e) no removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to Section 9.1 of the Trust Agreement
shall be made without the prior written consent (not to be unreasonably
withheld or delayed) of the Lessee.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
Each Lender may participate, assign or transfer all or a portion of its
interest hereunder and under the other Operative Agreements in accordance with
Sections 9.7 and 9.8 of the Credit Agreement; provided, at such time each
participant, assignee or transferee must obtain the same ratable interest in
Tranche A Loans, Tranche B Loans and the Lessee Credit Agreement. The Holders
may, directly or indirectly, assign, convey or otherwise transfer any of their
right, title or interest in or to the Trust Estate or the Trust Agreement with
the prior written consent of the Agent and the Lessee (which consent shall not
be unreasonably withheld or delayed) and in accordance with the terms of Section
11.8(b) of the Trust Agreement. The Owner Trustee may, subject to the rights of
the Lessee under the Lease and the other Operative Agreements and to the Lien of
the applicable Security Documents but only with the prior written consent of the
Agent (which consent may be withheld by the Agent in its sole discretion) and
(provided, no
42
Default or Event of Default has occurred and is continuing) with the consent of
the Lessee, directly or indirectly, assign, convey, appoint an agent with
respect to enforcement of, or otherwise transfer any of its right, title or
interest in or to any Property, the Lease, the Trust Agreement and the other
Operative Agreements (including without limitation any right to indemnification
thereunder), or any other document relating to a Property or any interest in a
Property as provided in the Trust Agreement and the Lease. The provisions of the
immediately preceding sentence shall not apply to the obligations of the Owner
Trustee to transfer Property to the Lessee or a third party purchaser pursuant
to Article XXII of the Lease upon payment for such Property in accordance with
the terms and conditions of the Lease. No Credit Party may assign any of the
Operative Agreements or any of their respective rights or obligations thereunder
or with respect to any Property in whole or in part to any Person without the
prior written consent of the Agent, the Lenders, the Holders and the Lessor.
10.2. EFFECT OF TRANSFER.
From and after any transfer effected in accordance with this Section
10, the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein to
the transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 10, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person) in any way relating to or arising or alleged to arise
out of the execution, delivery, performance or enforcement of this Agreement,
the Lease or any other Operative Agreement or on or with respect to any Property
or any component thereof, including without limitation Claims in any way
relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance, rejection, ownership, design, construction,
refurbishment, development, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, occupancy, operation, maintenance repair,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Property or
any part thereof, including without limitation the acquisition, holding or
43
disposition of any interest in the Property, lease or agreement comprising a
portion of any thereof; (b) any latent or other defects in any Property or any
portion thereof whether or not discoverable by an Indemnified Person or the
Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims
or other loss of or damage to any property or the environment relating to the
Property, the Lease, the Agency Agreement or the Indemnity Provider; (d) the
Operative Agreements, or any transaction contemplated thereby; (e) any breach by
the Indemnity Provider of any of its representations or warranties under the
Operative Agreements to which the Indemnity Provider is a party or failure by
the Indemnity Provider to perform or observe any covenant or agreement to be
performed by it under any of the Operative Agreements; (f) the transactions
contemplated hereby or by any other Operative Agreement, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA; and (g) personal
injury, death or property damage, including without limitation Claims based on
strict or absolute liability in tort.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding), for any Claim, such Indemnified
Person shall promptly notify the Indemnity Provider in writing and shall not
take action with respect to such Claim without the consent of the Indemnity
Provider for thirty (30) days after the receipt of such notice by the Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
be required by law or regulation to be taken prior to the end of such period of
thirty (30) days, such Indemnified Person shall endeavor to, in such notice to
the Indemnity Provider, inform the Indemnity Provider of such shorter period,
and no action shall be taken with respect to such Claim without the consent of
the Indemnity Provider before seven (7) days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
the notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure precludes in
all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person shall, at the expense of the Indemnity Provider, in good
faith conduct and control such action (including without limitation by pursuit
of appeals) (provided, however, that (A) if such Claim, in the Indemnity
Provider's reasonable discretion, can be pursued by the Indemnity Provider on
behalf of or in the name of such Indemnified Person, the Indemnified Person, at
the Indemnity Provider's request, shall allow the Indemnity Provider to conduct
and control the response to such Claim and (B) in the case of any Claim (and
notwithstanding the provisions of the foregoing subsection (A)), the Indemnified
Person may request the Indemnity Provider to conduct and control the response to
such Claim (with counsel to be selected by the Indemnity Provider and consented
to by such Indemnified Person, such consent not to be unreasonably withheld;
provided, however, that any Indemnified Person may retain separate counsel at
the expense of the Indemnity Provider in the event of a conflict)) by, in the
sole discretion of the Person conducting and controlling the response to such
Claim (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 appropriate administrative and
judicial proceedings, or (4) taking such other action as is reasonably requested
by the Indemnity Provider from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as
44
to the conduct of the response to such Claim; provided, that all decisions
ultimately shall be made in the discretion of the controlling party. The parties
agree that an Indemnified Person may at any time decline to take further action
with respect to the response to such Claim and may settle such Claim if such
Indemnified Person shall waive its rights to any indemnity from the Indemnity
Provider that otherwise would be payable in respect of such Claim (and any
future Claim, the pursuit of which is precluded by reason of such resolution of
such Claim) and shall pay to the Indemnity Provider any amount previously paid
or advanced by the Indemnity Provider pursuant to this Section 11.1 by way of
indemnification or advance for the payment of an amount regarding such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and no Indemnity
Provider shall be permitted to respond to any Claim in its own name or that of
the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay and shall pay to such Indemnified Person on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed by
the Indemnity Provider), the Indemnity Provider shall have agreed that the Claim
is an indemnifiable Claim hereunder, (B) in the case of a Claim that must be
pursued in the name of an Indemnified Person (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 for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified Person), (C) the Indemnified Person 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 Claim shall involve the
payment of any amount prior to the resolution of such Claim, the Indemnity
Provider shall provide to the Indemnified Person an interest-free advance in an
amount equal to the amount that the Indemnified Person is required to pay (with
no additional net after-tax cost to such Indemnified Person) prior to the date
such payment is due, (E) in the case of a Claim that must be pursued in the name
of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall
have provided to such Indemnified Person an opinion of independent counsel
selected by the Indemnified Person and reasonably satisfactory to the Indemnity
Provider stating that a reasonable basis exists to contest such Claim (or, in
the case of an appeal of an adverse determination, an opinion of such counsel to
the effect that the position asserted in such appeal will more likely than not
prevail) and (F) no Event of Default shall have occurred and be continuing. In
no event shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person 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 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnified Person and reasonably
acceptable to the Indemnity Provider stating that as a result of such change in
law (or interpretation thereof), it is more likely than not that the Indemnified
Person will prevail in such contest In no event shall the Indemnity Provider be
permitted to adjust or settle any Claim without the consent of the Indemnified
Person to the extent any such adjustment or settlement involves, or is
reasonably likely to involve, any performance by or adverse admission by or with
respect to the Indemnified Person.
45
11.2. GENERAL TAX INDEMNITY.
(a) The Indemnity Provider shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend each
Property and all Indemnified Persons, and hold them harmless against,
all Impositions on an After Tax Basis, and all payments pursuant to the
Operative Agreements shall be made free and clear of and without
deduction for any and all present and future Impositions.
(b) Notwithstanding anything to the contrary in Section
11.2(a) hereof, the following shall be excluded from the indemnity
required by Section 11.2(a):
(i) Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Indemnified Person
(other than the Lessor) by the United States federal
government that are based on or measured by the net income
(including without limitation taxes based on capital gains and
minimum taxes) of such Person; provided, that this clause (i)
shall not be interpreted to prevent a payment from being made
on an After Tax Basis if such payment is otherwise required to
be so made;
(ii) Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on any Indemnified Person
(other than the Lessor) by any state or local jurisdiction or
taxing authority within any state or local jurisdiction and
that are based upon or measured by the net income (including
without limitation taxes based on capital gains and minimum
taxes) of such Person; provided that such Taxes shall not be
excluded under this subparagraph (ii) to the extent the
location, possession or use of any Property in, the location
or the operation of the Lessee in, or the Lessee's making
payments under the Operative Agreements from, the jurisdiction
imposing such Taxes been the sole connection between such
Indemnified Person and the jurisdiction imposing such Taxes;
provided, further, that this clause (ii) shall not be
interpreted to prevent a payment from being made on an After
Tax Basis if such payment is otherwise required to be so made;
(iii) any Tax to the extent it relates to any act,
event or omission that occurs after the termination of the
Lease and redelivery or sale of the property in accordance
with the terms of the Lease (but not any Tax that relates to
such termination, redelivery or sale and/or to any period
prior to such termination, redelivery or sale); and
(iv) any Taxes which are imposed on an Indemnified
Person as a result of the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by
a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Indemnified
Person), but not Taxes imposed as a result of ordinary
negligence of such Indemnified Person;
(c) (i) Subject to the terms of Section 11.2(f), the
Indemnity Provider shall pay or cause to be paid all
Impositions directly to the taxing
46
authorities where feasible and otherwise to the Indemnified
Person, as appropriate, and the Indemnity Provider shall at
its own expense, upon such Indemnified Person's reasonable
request, furnish to such Indemnified Person 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 11.2(f) and which the
Indemnity Provider pays directly to the taxing authorities,
the Indemnity Provider shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which the
Indemnity Provider reimburses an Indemnified Person, the
Indemnity Provider shall do so within thirty (30) days after
receipt by the Indemnity Provider of demand by such
Indemnified Person describing in reasonable detail the nature
of the Imposition and the basis for the demand (including
without limitation the computation of the amount payable),
accompanied by receipts or other reasonable evidence of such
demand. In the case of Impositions for which a contest is
conducted pursuant to Section 11.2(f), the Indemnity Provider
shall pay such Impositions or reimburse such Indemnified
Person for such Impositions, to the extent not previously paid
or reimbursed pursuant to subsection (a), prior to the latest
time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under Section
11.2(f).
(iii) At the Indemnity Provider's request, the amount
of any indemnification payment by the Indemnity Provider
pursuant to subsection (a) shall be verified and certified by
an independent public accounting firm mutually acceptable to
the Indemnity Provider and the Indemnified Person. The fees
and expenses of such independent public accounting firm shall
be paid by the Indemnity Provider unless such verification
shall result in an adjustment in the Indemnity Provider's
favor of fifteen percent (15%) or more of the payment as
computed by the Indemnified Person, in which case such fee
shall be paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for
preparing and filing any real and personal property or ad valorem tax
returns in respect of each Property and any other tax returns required
for the Owner Trustee respecting the transactions described in the
Operative Agreements. In case any other report or tax return shall be
required to be made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a) and of which the
Indemnity Provider has knowledge or should have knowledge, the
Indemnity Provider, at its sole cost and expense, shall notify the
relevant Indemnified Person of such requirement and (except if such
Indemnified Person notifies the Indemnity Provider that such
Indemnified Person intends to file such report or return) (A) to the
extent required or permitted by and consistent with Legal Requirements,
make and file in Indemnity Provider's 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 Indemnified Person,
advise such Indemnified Person of such fact and prepare such return,
statement or report for filing by such Indemnified Person or, where
such return, statement or report shall be required to reflect items in
addition to any obligations of the Indemnity Provider under or arising
out of subsection (a), provide such Indemnified Person at the Indemnity
Provider's expense with information sufficient to permit such return,
statement or report to be properly made with respect to any obligations
of the Indemnity Provider under
47
or arising out of subsection (a). Such Indemnified Person shall, upon
the Indemnity Provider's request and at the Indemnity Provider's
expense, provide any data maintained by such Indemnified Person (and
not otherwise available to or within the control of the Indemnity
Provider) with respect to each Property which the Indemnity Provider
may reasonably require to prepare any required tax returns or reports.
(e) As between the Indemnity Provider on one (1) hand, and
each Financing Party on the other hand, the Indemnity Provider shall be
responsible for, and the Indemnity Provider shall indemnify and hold
harmless each Financing Party (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis
against, any obligation for United States or foreign withholding taxes
or similar levies, imposts, charges, fees, deductions or withholdings
(collectively, "Withholdings") imposed in respect of the interest
payable on the Notes, Holder Yield payable on the Certificates or with
respect to any other payments under the Operative Agreement (all such
payments being referred to herein as "Exempt Payments" to be made
without deduction, withholding or set off) (and, if any Financing Party
receives a demand for such payment from any taxing authority or a
Withholding is otherwise required with respect to any Exempt Payment,
the Indemnity Provider shall discharge such demand on behalf of such
Financing Party); provided, however, that the right of any Financing
Party to make a claim for indemnification under this Section 11.2(e) is
subject to the compliance by such Financing Party with the requirements
set forth below:
(i) Such Financing Party is, on the date hereof (or
on the date it becomes a Financing Party hereunder) and on the
date of any change in the principal place of business or the
lending office of such Financing Party, entitled to submit a
Form 1001 (relating to such Financing Party and entitling it
to a complete exemption from Withholding on all Exempt
Payments to be received by it hereunder or under the Bond
Documents) or Form 4224 is otherwise subject to exemption from
Withholding with respect to the Exempt Payments to be received
by it (except where the failure of the exemption results from
a change in the principal place of business of the Lessee;
provided if a failure of exemption for any Financing Party
results from a change in the principal place of business or
lending office of any other Financing Party, then such other
Financing Party shall be liable for any Withholding or
indemnity with respect thereto), or
(ii) The failure by a non-U.S. Person to comply with
applicable certification, information, documentation or other
reporting requirements concerning the nationality, residence,
identity or connections with the United States of America of
such non-U.S. Person if such compliance is required by statute
or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean
a citizen, national or resident of the United States of America, a
corporation, partnership or other entity created or organized in or
under any laws of the United States of America or any State thereof, or
any estate or trust that is subject to Federal income taxation
regardless of the source of its income, (B) "U.S. Taxes" shall mean any
present or future tax, assessment or other charge or levy imposed by or
on behalf of the United States of America or any taxing authority
thereof or
48
therein, (C) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or
Reduced Rate Certificate) of the Department of the Treasury of the
United States of America and (D) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with
the Conduct of a Trade or Business in the United States) of the
Department of Treasury of the United States of America (or in relation
to either such Form such successor and related forms as may from time
to time be adopted by the relevant taxing authorities of the United
States of America to document a claim to which such Form relates). Each
of the Forms referred to in the foregoing clauses (C) and (D) shall
include such successor and related forms as may from time to time be
adopted by the relevant taxing authorities of the United States of
America to document a claim to which such Form relates.
If a Financing Party or an Affiliate with whom such Financing
Party files a consolidated tax return (or equivalent) subsequently
receives the benefit in any country of a tax credit or an allowance
resulting from U.S. Taxes with respect to which it has received a
payment of an additional amount under this Section 11.2(e), such
Financing Party will pay to the Indemnity Provider such part of that
benefit as in the opinion of such Financing Party will leave it (after
such payment) in a position no more and no less favorable than it would
have been in if no additional payment had been required to be paid,
provided, always that (i) such Financing Party will be the sole judge
of the amount of any such benefit and of the date on which it is
received, (ii) such Financing Party will have the absolute discretion
as to the order and manner in which it employs or claims tax credits
and allowances available to it and (iii) such Financing Party will not
be obliged to disclose to the Borrower any information regarding its
tax affairs or tax computations.
Each non-U.S. Person that shall become a Financing Party after
the date hereof shall, upon the effectiveness of the related transfer
or otherwise upon becoming a Financing Party hereunder, be required to
provide all of the forms and statements referenced above or other
evidences of exemption from Withholdings.
(f) If a written Claim is made against any Indemnified Person
or if any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for
any Impositions, the provisions in Section 11.1 relating to
notification and rights to contest shall apply; provided, however, 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 Indemnified Person, the Indemnified Person, at the
Indemnity Provider's request, shall allow the Indemnity Provider (and
the Indemnity Provider shall be obligated) to conduct and control such
contest.
11.3 INCREASED COSTS, ILLEGALITY, ETC.
(a) If, due to either (i) the introduction of or any change
in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request hereafter adopted, promulgated
or made by any central bank or other governmental authority (whether or
not having the force of law), there shall be any increase in the cost
to any Financing Party of agreeing to make or making, funding or
maintaining Advances, then the Lessee shall from time to time, upon
demand by such Financing Party (with a copy of such demand to the Agent
but subject to the terms of Section 2.11 of the Credit Agreement and
3.9 of the Trust Agreement, as the case may be), pay to the Agent for
the account of such
49
Financing Party additional amounts sufficient to compensate such
Financing Party for such increased cost. A certificate as to the amount
of such increased cost, submitted to the Lessee and the Agent by such
Financing Party, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Financing Party determines that compliance with
any law or regulation or any guideline or request from any central bank
or other governmental authority (whether or not having the force of
law, but in each case promulgated or made after the date hereof)
affects or would affect the amount of capital required or expected to
be maintained by such Financing Party or any corporation controlling
such Financing Party and that the amount of such capital is increased
by or based upon the existence of such Financing Party's commitment to
make Advances and other commitments of this type or upon the Advances,
then, upon demand by such Financing Party (with a copy of such demand
to the Agent but subject to the terms of Section 2.11 of the Credit
Agreement and 3.9 of the Trust Agreement), the Lessee shall pay to the
Agent for the account of such Financing Party, from time to time as
specified by such Financing Party, additional amounts sufficient to
compensate such Financing Party or such corporation in the light of
such circumstances, to the extent that such Financing Party reasonably
determines such increase in capital to be allocable to the existence of
such Financing Party's commitment to make such Advances. A certificate
as to such amounts submitted to the Lessee and the Agent by such
Financing Party shall be conclusive and binding for all purposes,
absent manifest error.
(c) Without limiting the effect of the foregoing, the Lessee
shall pay to each Financing Party on the last day of the Interest
Period therefor so long as such Financing Party is maintaining reserves
against "Eurocurrency liabilities" under Regulation D an additional
amount (determined by such Financing Party and notified to the Lessee
through the Agent) equal to the product of the following for each
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for
each day during such Interest Period:
(i) the principal amount of such Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, outstanding on
such day; and
(ii) the remainder of (x) a fraction the numerator of
which is the rate (expressed as a decimal) at which interest
accrues on such Eurodollar Loan or Eurodollar Holder Advance,
as the case may be, for such Interest Period as provided in
the Credit Agreement or the Trust Agreement, as the case may
be (less the Applicable Percentage), and the denominator of
which is one (1) minus the effective rate (expressed as a
decimal) at which such reserve requirements are imposed on
such Financing Party on such day minus (y) such numerator; and
(iii) 1/360.
(d) Without affecting its rights under Sections 11.3(a),
11.3(b) or 11.3(c) or any other provision of any Operative Agreement,
each Financing Party agrees that if there is any increase in any cost
to or reduction in any amount receivable by such Financing Party with
respect to which the Lessee would be obligated to compensate such
Financing Party pursuant to Sections 11.3(a) or 11.3(b), such Financing
Party shall use reasonable efforts to select an alternative office for
Advances which would not result in any such increase in any cost to or
50
reduction in any amount receivable by such Financing Party; provided,
however, that no Financing Party shall be obligated to select an
alternative office for Advances if such Financing Party determines that (i)
as a result of such selection such Financing Party would be in violation of
any applicable law, regulation, treaty, guideline, or would incur
additional costs or expenses or (ii) such selection would be inadvisable
for regulatory reasons or materially inconsistent with the interests of
such Financing Party.
(e) With reference to the obligations of the Lessee set forth in
Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation
to pay to any Financing Party amounts owning under such Sections for any
period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.
(f) Notwithstanding any other provision of this Agreement, if any
Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for any Financing Party to perform its obligations
hereunder to make or maintain Eurodollar Loans or Eurodollar Holder
Advances, as the case may be, then (i) each Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, will automatically, at the earlier of
the end of the Interest Period for such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, or the date required by law, convert
into an ABR Loan or an ABR Holder Advance, as the case may be, and (iii)
the obligation of the Financing Parties to make, convert or continue
Eurodollar Loans or Eurodollar Holder Advances, as the case may be, shall
be suspended until the Agent shall notify the Lessee that such Financing
Party has determined that the circumstances causing such suspension no
longer exist.
11.4 FUNDING/CONTRIBUTION INDEMNITY.
Subject to the provisions of Section 2.11(a) of the Credit Agreement and
3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof has
been given in accordance with the provisions of the Operative Agreements or (c)
the making of a voluntary or involuntary prepayment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification shall be in
an amount equal to the excess, if any, of (x) the amount of interest or Holder
Yield, as the case may be, which would have accrued on the amount so prepaid, or
not so borrowed, accepted, converted or continued for the period from the date
of such prepayment or of such failure to borrow, accept, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
accept, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable Eurodollar Rate plus
the Applicable Percentage for such Loan or Holder Advance, as the case may be,
for such Interest Period over (y) the amount of interest (as determined by such
Financing Party in its reasonable discretion) which would have accrued to such
Financing Party on such amount by (i) (in the case of the Lenders) reemploying
such funds in loans of the same type and amount during the period from the date
of prepayment or failure to borrow to the last day of the then applicable
Interest Period (or, in the case of a failure to borrow, the Interest Period
that would have commenced on the date of such failure) and (ii) (in the case of
the Holders) placing such
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amount on deposit for a comparable period with leading banks in the relevant
interest rate market. This covenant shall survive the termination of the
Operative Agreements and the payment of all other amounts payable hereunder.
SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
The representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest of
the Owner Trustee in any Property or any interest of the Holders in the Trust
Estate, the payment of the Notes and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Agreements. Except as otherwise expressly
set forth herein or in other Operative Agreements, the indemnities of the
parties provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
12.2. 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 Agreement, 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.
12.3. NOTICES.
All notices required or permitted to be given under any Operative
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage paid with return receipt requested; by private courier, prepaid;
by telex, facsimile, or other telecommunication device capable of transmitting
or creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Couriered notices
shall be deemed delivered when delivered as addressed, or if the addressee
refuses delivery, when presented for delivery notwithstanding such refusal.
Telex or telecommunicated notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or acknowledged by the
addressee or its office. Personal delivery shall be effective when accomplished.
Unless a party changes its address by giving notice to the other party as
provided herein, notices shall be delivered to the parties at the following
addresses:
If to the Construction Agent or the Lessee, to such entity at
the following address:
Quorum ELF, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to any Guarantor, to such entity in care of Quorum at the
following address:
Quorum Health Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇,
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Holder, to it at the address set forth for such
Holder in Schedule I of the Trust Agreement.
If to the Agent, to it at the following address:
First Union National Bank
c/o First Union Capital Markets Group
DC-6
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇,
Capital Markets Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender, to it at the address set forth for such
Lender in Schedule 1.1 of the Credit Agreement.
From time to time any party may designate additional parties
and/or another address for notice purposes by notice to each of the
other parties hereto. Each notice hereunder shall be effective upon
receipt or refusal thereof.
12.4. COUNTERPARTS.
This 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 (1) and the same
instrument.
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12.5. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE
MATTERS.
Each Operative Agreement may be terminated, amended, supplemented,
waived or modified only by an instrument in writing signed by, subject to
Article VIII of the Trust Agreement regarding termination of the Trust
Agreement, the Majority Secured Parties and each Credit Party (to the extent
such Credit Party is a party to such Operative Agreement); provided, to the
extent no Default or Event of Default shall have occurred and be continuing, the
Majority Secured Parties shall not amend, supplement, waive or modify any
provision of any Operative Agreement in such a manner as to adversely affect the
rights of any Credit Party without the prior written consent (not to be
unreasonably withheld or delayed) of such Credit Party. In addition, (a) the
Unanimous Vote Matters shall require the consent of each Lender and each Holder
affected by such matter and (b) any provision of any Operative Agreement
incorporated by reference or otherwise referenced in a second Operative
Agreement shall remain, respecting such second Operative Agreement, in its
original form without regard to any such termination, amendment, supplement,
waiver or modification in the first Operative Agreement except if such has been
agreed to by an instrument in writing signed by, subject to Article VIII of the
Trust Agreement regarding termination of the Trust Agreement, the Majority
Secured Parties and each Credit Party (to the extent such Credit Party is a
party to such Operative Agreement).
Notwithstanding the foregoing, no such termination, amendment,
supplement, waiver or modification shall, without the consent of the Agent and,
to the extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) reduce the amount of any Note or any Certificate,
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or any Certificate, reduce
the stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post-default increase in interest rates or Holder Yields), modify the
priority of any Lien in favor of the Agent under any Security Document,
subordinate any obligation owed to any Lender or Holder, reduce any Lender
Unused Fees or any Holder Unused Fees payable under the Participation Agreement,
extend the scheduled date of payment of any Lender Unused Fees or any Holder
Unused Fees or increase the amount or extend the expiration date of any Lender's
Commitment or the Holder Commitment of any Holder, or (ii) terminate, amend,
supplement, waive or modify any provision of this Section 12.5 or reduce the
percentages specified in the definitions of Majority Lenders, Majority Holders
or Majority Secured Parties, or consent to the assignment or transfer by the
Owner Trustee of any of its rights and obligations under any Credit Document or
release a material portion of the Collateral (except in accordance with Section
8.8) or release any Credit Party from its obligations under any Operative
Agreement or otherwise alter any payment obligations of any Credit Party to the
Lessor or any Financing Party under the Operative Agreements, or (iii)
terminate, amend, supplement, waive or modify any provision of Section 7 of the
Credit Agreement, or (iv) permit Advances for Work in excess of the Construction
Budget, or (v) eliminate the automatic option under Section 5.3(b) of the Agency
Agreement requiring that the Construction Agent pay certain liquidated damages
in exchange for the conveyance of a Property to the Construction Agent. Any such
termination, amendment, supplement, waiver or modification shall apply equally
to each of the Lenders and the Holders and shall be binding upon all the parties
to this Agreement. In the case of any waiver, each party to this Agreement shall
be restored to its former position and rights under the Operative Agreements,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then,
54
for so long as such failure shall continue, the Defaulting Lender shall (unless
the Lessee and the Majority Lenders, determined as if the Defaulting Lender were
not a "Lender", shall otherwise consent in writing) be deemed for all purposes
relating to terminations, amendments, supplements, waivers or modifications
under the Operative Agreements to have no Loans, shall not be treated as a
"Lender" when performing the computation of Majority Lenders or Majority Secured
Parties, and shall have no rights under this Section 12.5; provided that any
action taken pursuant to the second paragraph of this Section 12.5 shall not be
effective as against the Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority Secured
Parties, and shall have no rights under this Section 12.5; provided that any
action taken pursuant to the second paragraph of this Section 12.5 shall not be
effective as against the Defaulting Holder.
12.6. HEADINGS, ETC.
The Table of Contents and headings of the various Articles and 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.
12.7. PARTIES IN INTEREST.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; VENUE; ARBITRATION.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal
action or proceeding with respect to this Agreement or any other
Operative Agreement may be brought in the courts of the State of North
Carolina in Mecklenburg County or of the United States for the Western
District of North Carolina, and, by execution and delivery of this
Agreement, each of the parties to this Agreement hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the nonexclusive jurisdiction of such courts. Each of
the parties to this Agreement further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 12.3, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by
Law or to commence legal proceedings or to otherwise proceed against
any party in any other jurisdiction.
55
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW,
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
(c) Each of the parties to this Agreement hereby irrevocably
waives any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings arising out of
or in connection with this Agreement or any other Operative Agreement
brought in the courts referred to in subsection (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(d) Notwithstanding the provisions of Section 12.8(a) or of
any other Operative Agreement to the contrary, upon demand of any party
to this Agreement and/or any other Operative Agreement, whether made
before or within three (3) months after institution of any judicial
proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Agreement and/or any other Operative Agreement
between or among parties to this Agreement and/or any other Operative
Agreement ("Disputes") shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does
not waive the right of that party to demand arbitration hereunder.
Disputes may include without limitation tort claims, counterclaims,
disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from agreements executed in
the future, or claims arising out of or connected with the transaction
reflected by this Agreement and/or any other Operative Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association (the "AAA") and Title 9
of the United States Code. All arbitration hearings shall be conducted
in Charlotte, North Carolina. A hearing shall begin within ninety (90)
days of demand for arbitration and all hearings shall be conducted
within one hundred and twenty (120) days of demand for arbitration.
These time limitations may not be extended unless a party shows cause
for extension and then no more than a total extension of sixty (60)
days. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall
be comprised of licensed attorneys selected from the Commercial
Financial Disputes Arbitration Panel of the AAA. The single arbitrator
selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state
where the hearing will be conducted or if such person is not available
to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements.
Notwithstanding the immediately preceding binding arbitration
provisions, the parties to this Agreement and/or any other Operative
Agreement agree to preserve, without diminution, certain remedies that
the Agent on behalf of the Lenders and the Holders may employ or
exercise freely, independently or in connection with an arbitration
proceeding or after an arbitration action is brought.
56
The Agent on behalf of the Lenders and the Holders shall have the right
to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies, as applicable (i) all
rights to foreclose against any real or personal property or other
security by exercising a power of sale granted under any Operative
Agreement or under applicable Law or by judicial foreclosure and sale,
including without limitation a proceeding to confirm the sale; (ii) all
rights of self-help including without limitation peaceful occupation of
real property and collection of rents, set-off and peaceful possession
of personal property; (iii) obtaining provisional or ancillary remedies
including without limitation injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment
by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
The parties to this Agreement and/or any other Operative
Agreement agree that they shall not have a remedy of special, punitive
or exemplary damages against any other party in any Dispute and hereby
waive any right or claim to special, punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
By execution and delivery of this Agreement and/or any other
Operative Agreement, each of the parties hereto and/or thereto accepts,
for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any
arbitration proceedings conducted under the Arbitration Rules in
Charlotte, North Carolina and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Agreement
and/or any other Operative Agreement from which no appeal has been
taken or is available.
12.9. SEVERABILITY.
Any provision of this 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.
12.10. LIABILITY LIMITED.
(a) The Lenders, the Agent, the Credit Parties, the Owner
Trustee and the Holders each acknowledge and agree that the Owner
Trustee is (except as otherwise expressly provided herein or therein)
entering into this Agreement and the other Operative Agreements to
which it is a party (other than the Trust Agreement and to the extent
otherwise provided in Section 6.2 of this Agreement), solely in its
capacity as trustee under the Trust Agreement and not in its individual
capacity and that the Trust Company shall not be liable or accountable
under any circumstances whatsoever in its individual capacity for or on
account of any statements, representations, warranties, covenants or
obligations stated to be those of the Owner Trustee, except for its own
gross negligence or willful misconduct and as otherwise expressly
provided herein or in the other Operative Agreements.
57
(b) Anything to the contrary contained in this Agreement, the
Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in any
respect for any liability or obligation arising hereunder or in any
other Operative Agreement including without limitation the payment of
the principal of, or interest on, the Notes, or for monetary damages
for the breach of performance of any of the covenants contained in the
Credit Agreement, the Notes, this Agreement, the Security Agreement or
any of the other Operative Agreements. The Lenders, the Holders and the
Agent agree that, in the event any remedies under any Operative
Agreement are pursued, neither the Lenders, the Holders nor the Agent
shall have any recourse against any Exculpated Person, for any
deficiency, loss or Claim for monetary damages or otherwise resulting
therefrom and recourse shall be had solely and exclusively against the
Trust Estate (excluding Excepted Payments) and the Credit Parties (with
respect to the Credit Parties' obligations under the Operative
Agreements); but nothing contained herein shall be taken to prevent
recourse against or the enforcement of remedies against the Trust
Estate (excluding Excepted Payments) in respect of any and all
liabilities, obligations and undertakings contained herein and/or in
any other Operative Agreement. Notwithstanding the provisions of this
Section, nothing in any Operative Agreement shall: (i) constitute a
waiver, release or discharge of any indebtedness or obligation
evidenced by the Notes and/or the Certificates arising under any
Operative Agreement or secured by any Operative Agreement, but the same
shall continue until paid or discharged; (ii) relieve any Exculpated
Person from liability and responsibility for (but only to the extent of
the damages arising by reason of): active waste knowingly committed by
any Exculpated Person with respect to any Property, any fraud, gross
negligence or willful misconduct on the part of any Exculpated Person;
(iii) relieve any Exculpated Person from liability and responsibility
for (but only to the extent of the moneys misappropriated, misapplied
or not turned over) (A) except for Excepted Payments, misappropriation
or misapplication by the Lessor (i.e., application in a manner contrary
to any of the Operative Agreements) of any insurance proceeds or
condemnation award paid or delivered to the Lessor by any Person other
than the Agent, (B) except for Excepted Payments, any deposits or any
escrows or amounts owed by the Construction Agent under the Agency
Agreement held by the Lessor or (C) except for Excepted Payments, any
rent or other income received by the Lessor from any Credit Party that
is not turned over to the Agent; or (iv) affect or in any way limit the
Agent's rights and remedies under any Operative Agreement with respect
to the Rents and rights and powers of the Agent under the Operative
Agreements or to obtain a judgment against the Lessee's interest in the
Properties or the Agent's rights and powers to obtain a judgment
against the Lessor or any Credit Party (provided, that no deficiency
judgment or other money judgment shall be enforced against any
Exculpated Person except to the extent of the Lessor's interest in the
Trust Estate (excluding Excepted Payments) or to the extent the Lessor
may be liable as otherwise contemplated in clauses (ii) and (iii) of
this Section 12.10(b)).
12.11. RIGHTS OF THE CREDIT PARTIES.
If at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents and the other Operative Agreements and
(ii) of the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full, then the Credit Parties shall be entitled to
(a) terminate the Lease and the guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination
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of the Lease and Section 6B pursuant to the foregoing clause (a), the Lessor
shall transfer to the Lessee or its designee all of its right, title and
interest free and clear of the Lien of the Lease, the Lien of the Security
Documents and all Lessor Liens in and to any Properties then subject to the
Lease and any amounts or proceeds referred to in the foregoing clause (b) shall
be paid over to the Lessee.
12.12. 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 Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments 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 without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement.
12.13. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Owner Trustee
shall be made by the Agent and that such calculations and determinations shall
be conclusive and binding on the parties hereto in the absence of manifest
error; provided, notwithstanding the foregoing, Lessee shall retain its right to
contest matters in accordance with the express provisions of the Operative
Agreements.
12.14. CONFIDENTIALITY.
Each Financing Party severally agrees to use reasonable efforts to keep
confidential all non-public information pertaining to any Credit Party or any of
its Subsidiaries which is provided to it by any Credit Party or any of its
Subsidiaries and which an officer of any Credit Party or any of its Subsidiaries
has requested in writing be kept confidential, and shall not intentionally
disclose such information to any Person except:
(a) to the extent such information is public when received by
such Person or becomes public thereafter due to the act or omission of
any party other than such Person;
(b) to the extent such information is independently obtained
from a source other than any Credit Party or any of its Subsidiaries
and such information from such source is not, to such Person's
knowledge, subject to an obligation of confidentiality or, if such
information is subject to an obligation of confidentiality, that
disclosure of such information is permitted;
(c) to counsel, auditors or accountants retained by any such
Person or any Affiliates of any such Person (if such Affiliates are
permitted to receive such information pursuant to clause (f) or (g)
below), provided they agree to keep such information confidential as if
such Person or Affiliate were party to this
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Agreement and to financial institution regulators, including examiners
of any Financing Party or any Affiliate thereof in the course of
examinations of such Persons;
(d) in connection with any litigation or the enforcement or
preservation of the rights of any Financing Party under the Operative
Agreements;
(e) to the extent required by any applicable statute, rule or
regulation or court order (including without limitation, by way of
subpoena) or pursuant to the request of any regulatory or Governmental
Authority having jurisdiction over any such Person; provided, however,
that such Person shall endeavor (if not otherwise prohibited by Law) to
notify the Lessee prior to any disclosure made pursuant to this clause
(e), except that no such Person shall be subject to any liability
whatsoever for any failure to so notify the Lessee;
(f) any Financing Party may disclose such information to
another Financing Party or to any Affiliate of a Financing Party that
is a direct or indirect owner of any Financing Party;
(g) any Financing Party may disclose such information to an
Affiliate of any Financing Party to the extent required in connection
with the transactions contemplated hereby or to the extent such
Affiliate is involved in, or provides advice or assistance to such
Person with respect to, such transactions (provided, in each case that
such Affiliate has agreed in writing to maintain confidentiality as if
it were such Financing Party (as the case may be)); or
(h) to the extent disclosure to any other financial
institution or other Person is appropriate in connection with any
proposed or actual (i) assignment or grant of a participation by any of
the Lenders of interests in the Credit Agreement or any Note to such
other financial institution (who will in turn be required by the Agent
to agree in writing to maintain confidentiality as if it were a Lender
originally party to this Agreement) or (ii) assignment by any Holder of
interests in the Trust Agreement to another Person (who will in turn be
required by the transferring Holder to agree in writing to maintain
confidentiality as if it were a Holder originally party to this
Agreement).
Subject to the terms of Sections 12.14(a), (b), (d) and (e) under the
terms of any one or more of which circumstances disclosure shall be permitted,
each Financing Party severally agrees to use reasonable efforts to keep
confidential all non-public information pertaining to the financing structure
described in the unrecorded Operative Agreements.
12.15. FINANCIAL REPORTING/TAX CHARACTERIZATION.
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization.
12.16. SET-OFF.
In addition to any rights now or hereafter granted under applicable Law
and not by way of limitation of any such rights, upon and after the
occurrence of any Event of Default and during the continuance thereof,
the Lenders, the Holders,
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their respective Affiliates and any assignee or participant of a Lender
or a Holder in accordance with the applicable provisions of the
Operative Agreements are hereby authorized by the Credit Parties at any
time or from time to time, without notice to the Credit Parties or to
any other Person, any such notice being hereby expressly waived, to
set-off and to appropriate and to apply any and all deposits (general
or special, time or demand, including without limitation indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and
any other indebtedness at any time held or owing by the Lenders, the
Holders, their respective Affiliates or any assignee or participant of
a Lender or a Holder in accordance with the applicable provisions of
the Operative Agreements to or for the credit or the account of any
Credit Party against and on account of the obligations of any Credit
Party under the Operative Agreements irrespective of whether or not (a)
the Lenders or the Holders shall have made any demand under any
Operative Agreement or (b) the Agent shall have declared any or all of
the obligations of any Credit Party under the Operative Agreements to
be due and payable and although such obligations shall be contingent or
unmatured.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CONSTRUCTION AGENT
AND LESSEE:
QUORUM ELF, INC., a Delaware corporation
By:
Name:
Title:
61
GUARANTORS:
QUORUM HEALTH GROUP, INC.,
a Delaware corporation
CAROLINAS MEDICAL ALLIANCE, INC.,
a South Carolina corporation
CLINTON COUNTY HEALTH SYSTEM LLC,
a Delaware limited liability company
FRANKFORT HEALTH PARTNER, INC.,
an Indiana corporation
GADSDEN REGIONAL PRIMARY CARE, INC.,
an Alabama corporation
HOSPITAL MANAGEMENT PROFESSIONALS, INC.,
a Tennessee corporation
MIDDLE GEORGIA MOB, INC.,
a Georgia corporation
NC-CNH, INC.,
a Georgia corporation