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EXECUTION COPY
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PARTICIPATION AGREEMENT
dated as of October 22, 1998
among
THE HOME DEPOT, INC.,
as Guarantor,
HOME DEPOT U.S.A., INC., as
Lessee,
HD REAL ESTATE FUNDING CORP. II,
as Facility Lender,
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor,
THE BANK OF NEW YORK,
as Indenture Trustee
and
CREDIT SUISSE FIRST BOSTON CORPORATION
and
INVEMED ASSOCIATES, INC.,
as Initial Purchasers
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS; INTERPRETATION.....................................................................2
SECTION 2. CLOSING DATE....................................................................................2
SECTION 3. LEASE OF LAND AND FACILITIES; FINANCING ARRANGEMENTS............................................2
SECTION 3.1. Lessor's Agreement to Refinance and Lease. ...........................................2
SECTION 3.2. Facility Lender's Agreements...........................................................3
SECTION 3.3. Issuance of Fixed Rate Notes...........................................................3
SECTION 3.4. Allocation of Lessor Investment Amount and Loan........................................3
SECTION 4. CERTIFICATE EARNINGS; INTEREST; COMMITMENT FEES.................................................4
SECTION 4.1. Certificate Earnings...................................................................4
SECTION 4.2. Interest on Loan.......................................................................4
SECTION 5. DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS...............................................4
SECTION 5.1. Agreement of Indenture Trustee and Participants........................................4
SECTION 5.2. Basic Rent.............................................................................5
SECTION 5.3. Purchase Payments by Lessee............................................................6
SECTION 5.4. Residual Value Guaranty................................................................7
SECTION 5.5. Sales Proceeds of Remarketing of Properties............................................7
SECTION 5.6. Supplemental Rent......................................................................8
SECTION 5.7. Excepted Payments......................................................................8
SECTION 5.8. Distribution of Payments after Lease Event of
Default or Loan Agreement Event of Default....................................8
SECTION 5.9. Other Payments.........................................................................9
SECTION 5.10. Casualty and Condemnation Amounts.....................................................10
SECTION 5.11. Order of Application..................................................................10
SECTION 5.12. Remaining Funds.......................................................................10
SECTION 5.13. Time of Payment.......................................................................10
SECTION 6. CERTAIN INTENTIONS OF THE PARTIES..............................................................10
SECTION 7. CONDITIONS PRECEDENT TO CLOSING DATE...........................................................11
SECTION 7.1. Conditions Precedent -- Documentation.................................................11
SECTION 7.2. Conditions Precedent -- Properties....................................................14
SECTION 7.3. INTENTIONALLY OMITTED.................................................................16
SECTION 7.4. Conditions Precedent to Substitution of Properties....................................16
SECTION 8. REPRESENTATIONS................................................................................18
SECTION 8.1. Representations of the Lessor.........................................................18
SECTION 8.2. Representations of the Guarantor and the Lessee.......................................20
SECTION 8.3. Representations of Guarantor and Lessee as to Properties..............................23
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SECTION 8.4. Representations of Facility Lender....................................................23
SECTION 8.5. Representations and Warranties of the Indenture Trustee...............................24
SECTION 9. PAYMENT OF CERTAIN EXPENSES....................................................................25
SECTION 9.1. Transaction Expenses..................................................................25
SECTION 9.2. Brokers' Fees and Stamp Taxes. ......................................................25
SECTION 9.3. Certain Fees and Expenses. ..........................................................25
SECTION 10. OTHER COVENANTS AND AGREEMENTS.................................................................26
SECTION 10.1. Covenants of Guarantor and Lessee.....................................................26
SECTION 10.2. Cooperation with the Lessee...........................................................32
SECTION 10.3. Release of Properties.................................................................32
SECTION 10.4. Discharge of Liens....................................................................32
SECTION 10.5. Notice of Credit Rating...............................................................33
SECTION 10.6. Covenants of the Facility Lender and the Lessor.......................................33
SECTION 10.7. No Bankruptcy Proceedings.............................................................34
SECTION 10.8. Notice of Claims Against Lessor.......................................................35
SECTION 11. LESSEE DIRECTIONS..............................................................................35
SECTION 11.1. Lessee Directions. ..................................................................35
SECTION 12. TRANSFER OF INTEREST...........................................................................36
SECTION 12.1. Restrictions on and Effect of Transfer................................................36
SECTION 12.2. Replacement of Lessor or Facility Lender..............................................36
SECTION 13. INDEMNIFICATION................................................................................37
SECTION 13.1. General Indemnification...............................................................37
SECTION 13.2. Environmental Indemnity...............................................................39
SECTION 13.3. Proceedings in Respect of Claims......................................................41
SECTION 13.4. End of Term Indemnity.................................................................42
SECTION 13.5. General Tax Indemnity.................................................................43
SECTION 14. MISCELLANEOUS..................................................................................47
SECTION 14.1. Survival of Agreements................................................................47
SECTION 14.2. No Broker; etc........................................................................47
SECTION 14.3. Notices 47
SECTION 14.4. Counterparts..........................................................................50
SECTION 14.5. Amendments............................................................................50
SECTION 14.6. Usury 51
SECTION 14.7. Confidentiality.......................................................................51
SECTION 14.8. Headings; etc. ......................................................................52
SECTION 14.9. Parties in Interest...................................................................52
SECTION 14.10. GOVERNING LAW.........................................................................52
SECTION 14.11. Severability..........................................................................52
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SECTION 14.12. Further Assurances....................................................................52
SECTION 14.13. WAIVER OF JURY TRIAL..................................................................53
SECTION 14.14. Limitations on Recourse Against Lessor................................................53
SECTION 14.15. Limitation on Recourse Against Facility Lender........................................53
APPENDICES
APPENDIX 1 Definitions and Interpretation
APPENDIX 2 Property Costs
APPENDIX 3 Pricing Provisions for Lessor Investment Amount
EXHIBITS
EXHIBIT A Opinion of Counsel to Lessee
EXHIBIT B Opinion of Counsel to Facility Lender
EXHIBIT C Opinion of Counsel to Lessor
EXHIBIT D Assignment of Lease and Consent to Assignment
EXHIBIT E Master Assignment and Consent to Master Assignment
EXHIBIT F Form of Lease
EXHIBIT G Form of Opinion of Counsel to Lessee Required for Substitution of Properties
EXHIBIT H Form of Compliance Certificate
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of October 22, 1998 (this
"Agreement" or "Participation Agreement"), is entered into by and among THE HOME
DEPOT, INC., a Delaware corporation, as Guarantor (the "Guarantor"), HOME DEPOT
U.S.A., INC. a Delaware corporation, as Lessee ("Lessee"), HD REAL ESTATE
FUNDING CORP. II, a Delaware corporation ("Facility Lender"), CREDIT SUISSE
LEASING 92A, L.P., a Delaware limited partnership, as lessor ("Lessor"), THE
BANK OF NEW YORK, a banking corporation organized and existing under the laws of
the State of New York, as Indenture Trustee for the Noteholders (in such
capacity, the "Indenture Trustee") and CREDIT SUISSE FIRST BOSTON CORPORATION
and INVEMED ASSOCIATES, INC. (collectively, the "Initial Purchasers").
PRELIMINARY STATEMENT
In accordance with the terms of this Participation Agreement, the
Lease, the Loan Agreement, the Indenture of Trust and the other Operative
Documents,
A. the Lessor is the owner of certain parcels of Land on
which certain Improvements have been constructed for the use of Lessee;
B. the Lessor wishes to refinance approximately 97% of the
total cost of the acquisition of such Land and the construction of such
Improvements;
C. the Facility Lender has agreed to issue Fixed Rate Notes at
par to the Initial Purchasers pursuant to the Indenture of Trust in an
aggregate principal amount equal to the Maximum Debt Amount, with the
gross proceeds of the sale of the Fixed Rate Notes to be lent to the
Lessor pursuant to the Loan Agreement for the refinancing of the
existing indebtedness secured by Liens on the Properties;
D. the Lessee wishes to lease the Properties from the Lessor
under the Lease and the Guarantor is willing to guarantee the Lessee's
obligations under the Operative Documents;
E. the Lessee, in consideration of the obligations of the
Facility Lender pursuant to the Operative Documents, is willing to pay
all costs and fees of the Participants incurred in connection with the
transactions contemplated hereby, subject to the limitations contained
herein;
F. to secure its obligations to the Facility Lender pursuant
to the Loan Agreement, the Lessor is granting a lien to the Facility
Lender, pursuant to the Mortgages and the other Security Documents, on
all of the Lessor's right, title and interest in the Properties and
substantially all of the Lessor's rights under the Lease with respect
to the Properties; and
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G. to secure its obligations to the Indenture Trustee and the
Noteholders under the Indenture of Trust, the Facility Lender is
pledging to the Indenture Trustee, for the benefit of the Noteholders,
pursuant to the Master Assignment, substantially all of its right,
title and interest in and to the Loan Agreement, the Note and Security
Documents received from the Lessor.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1.
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix 1
attached hereto and made a part hereof by this reference for all purposes
hereof; and the rules of interpretation set forth in Appendix 1 hereto shall
apply to this Participation Agreement.
SECTION 2.
CLOSING DATE
The Closing Date shall occur on the earliest date (on or before October
30, 1998) on which all the conditions precedent thereto set forth in this
Agreement shall have been satisfied or waived by the applicable parties as set
forth therein (such date referred to herein as the "Closing Date").
SECTION 3.
LEASE OF LAND AND FACILITIES; FINANCING ARRANGEMENTS
SECTION 3.1. Lessor's Agreement to Refinance and Lease. Subject to the
conditions and terms of this Participation Agreement and the other Operative
Documents, the Lessor agrees to take the following actions on the Closing Date:
(a) to refinance the existing indebtedness secured by the
Properties listed on Appendix 2 hereto in the amount of
$273,278,000 with the proceeds of the Loan from the Facility
Lender;
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(b) to have invested its own funds in the Properties in an amount
of not less than the Minimum Equity Amount; and
(c) to lease the Properties listed on Appendix 2 to the Lessee
under the Lease.
Notwithstanding any other provision hereof, after giving effect to the
transactions contemplated hereby, the following statements shall be true (i) the
Lessor shall have invested the Lessor Investment Amount in the Properties in the
amount shown on Appendix 2, (ii) the aggregate Property Costs with respect to
the Properties shall not exceed the Maximum Property Cost, (iii) the aggregate
Property Costs with respect to the Properties listed on Appendix 2 shall not
exceed 100% of the aggregate As Built Value of such Properties; and (iv) each of
the Properties shall be a Facility located in the continental United States.
SECTION 3.2. Facility Lender's Agreements. Subject to the conditions
and terms of this Participation Agreement and the other Operative Documents, the
Facility Lender agrees to make the Loan to the Lessor on the Closing Date
pursuant to the Loan Agreement in an aggregate principal amount equal to the
Maximum Debt Amount for the Lessor to refinance the existing indebtedness
secured by the Properties. Notwithstanding any other provision hereof, the
Facility Lender shall not be obligated to make the Loan if the Facility Lender
is unable to issue Fixed Rate Notes in an amount sufficient to fund such Loan
pursuant to Section 3.3.
SECTION 3.3. Issuance of Fixed Rate Notes. Subject to the terms and
conditions of this Participation Agreement, the Purchase Agreement and the other
Operative Documents, in order to fund its obligation to make the Loan to the
Lessor pursuant to the Loan Agreement, the Facility Lender shall on the Closing
Date, issue the Fixed Rate Notes pursuant to the Indenture of Trust to the
Initial Purchasers at par in an aggregate principal amount equal to the Maximum
Debt Amount.
SECTION 3.4. Allocation of Lessor Investment Amount and Loan.
Notwithstanding any provision of this Participation Agreement to the contrary,
the outstanding Facility Lender Property Balance and Lessor Property Balance
with respect to each Property shall equal the amount set forth for each Property
on Appendix 2, or in the event of any Property substituted therefor after the
Closing Date, in the applicable Lease Supplement, as such amounts may be reduced
from time to time pursuant to the terms of the Operative Documents.
SECTION 3.5. Use of Proceeds. The proceeds of the Loan shall be used
to refinance the existing indebtedness in the principal amount of $273,278,000
secured by the Properties (the "Existing Indebtedness").
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SECTION 4.
CERTIFICATE EARNINGS; INTEREST; COMMITMENT FEES
SECTION 4.1. Certificate Earnings. (a) The amount of the Lessor
Investment Amount outstanding from time to time shall accrue earnings
("Certificate Earnings") at the Certificate Earnings Rate. If all or any portion
of the Lessor Investment Amount, any Certificate Earnings payable thereon or any
other amount payable by Guarantor or Lessee hereunder shall not be paid within
thirty (30) days of the date when due (whether at stated maturity, the
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is equal to the Overdue Rate which, in the event such amount is
not paid within such thirty (30) day period, shall be deemed to have begun to
accrue on the due date thereof.
(b) Lessor shall select the applicable Certificate Earnings
Rate in accordance with the terms and conditions set forth on Appendix 3
attached hereto and incorporated herein by this reference.
(c) On each Payment Date, the Lessor shall, subject to the
provisions of Section 5, receive the Lessor Basic Rent (determined on the basis
of accrued Certificate Earnings) received from payments of Basic Rent made by
the Lessee under the Lease from time to time as provided in Section 5.
SECTION 4.2. Interest on Loan. (a) The Loan shall accrue interest
computed and payable in accordance with the terms of the Loan Agreement.
(b) The interest on the Loan shall be paid through the payment
of the Lender Basic Rent (determined on the basis of interest on the Loan)
received from payments of Basic Rent made by the Lessee under the Lease from
time to time as provided in Section 5.
SECTION 5.
DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS
In order to provide for the priority and allocation of payments
received from the Lessee and Guarantor and the proceeds of the exercise of
remedies by any of the Participants pursuant to the Security Documents, the
parties hereto agree as follows:
SECTION 5.1. Agreement of Indenture Trustee and Participants. Pursuant
to the Master Assignment, all of the payments (other than the Excepted Payments)
under the Lease, the Mortgages, the Note, the Participation Agreement and the
Loan Agreement have been assigned to the Indenture Trustee for the benefit of
the Noteholders. The Indenture Trustee hereby agrees to deposit all such
payments, receipts and other consideration of any kind whatsoever (other than
the Excepted Payments) received by the Indenture Trustee pursuant to the Master
Assignment and any other Security Document in the form received into a
segregated cash collateral account
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maintained by the Indenture Trustee for such purpose, which account shall be an
Eligible Account (as defined in the Indenture of Trust) (the "Cash Collateral
Account"); provided however, each of the Participants expressly agrees that
unless the Lessee has received notice that a Loan Agreement Default or Loan
Agreement Event of Default has occurred and is continuing, the Lessee may make
any payments of Basic Rent constituting Certificate Earnings directly to the
Lessor on each Payment Date. Each Participant hereby agrees that any payment
received pursuant to the Guaranty shall immediately be delivered in the form
received to the Indenture Trustee for deposit in the Cash Collateral Account and
application as set forth herein. The Indenture Trustee shall make distributions
from the Cash Collateral Account pursuant to the requirements of this Section 5
to each Participant or other Person entitled thereto as promptly as possible (it
being understood that any such payment received on a timely basis in accordance
with the provisions of the Lease, this Participation Agreement and the other
Operative Documents shall be distributed by the Indenture Trustee on the same
Business Day to the extent practicable).
SECTION 5.2. Basic Rent. Subject to Section 5.8, each payment of Basic
Rent (and any payment of interest on overdue installments of Basic Rent) shall
be made by Lessee to the Indenture Trustee (subject to the proviso set forth in
Section 5.1 hereof) and shall be distributed by the Indenture Trustee as follows
(in the following order of priority):
first, an amount equal to the Lender Basic Rent shall be
distributed to the Noteholders for application to pay in full all
accrued but unpaid interest owing to the Noteholders pursuant to the
terms of the Indenture of Trust and the Fixed Rate Notes, with a
corresponding reduction of accrued interest on the Loan, and
second, subject to the last paragraph of this Section 5.2, to
the extent received by the Indenture Trustee, an amount equal to the
Lessor Basic Rent shall be distributed to the Lessor for application to
pay in full all accrued but unpaid Certificate Earnings (together with
any overdue interest thereon).
Notwithstanding any provision of this Section 5.2 to the contrary, in
the event that a Loan Agreement Default under Section 5(a) or (e) of the Loan
Agreement or a Loan Agreement Event of Default shall have occurred and be
continuing, any such payments which would otherwise be paid to the Lessor
pursuant to clause second of this Section 5.2 shall be instead held in the Cash
Collateral Account until the earliest to occur of (i) the first date thereafter
on which all such Loan Agreement Defaults and Loan Agreement Events of Default
shall have been cured (in which case such payment under clause second shall then
be made), (ii) the date of any acceleration of the Loan (in which case such
payment shall then be applied in the manner contemplated by Section 5.8), or
(iii) the 180th day after the occurrence of such Loan Agreement Default or Loan
Agreement Event of Default (in which case such payment under clause second shall
then be made); provided, however, that notwithstanding the disposition of any
prior installment of Lessor Basic Rent under this Section 5.2, each time an
installment of Lessor Basic Rent is received by the Indenture Trustee,
distribution of such funds shall be made pursuant to clause second, subject to
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the terms of this paragraph.
SECTION 5.3. Purchase Payments by Lessee. Subject to Section 5.8, any
payment made by the Lessee pursuant to the Lease as a result of:
(a) the purchase of the Properties in connection with Lessee's
exercise of its Lease Termination Date Purchase Option
pursuant to Section 22.2 of the Lease, or
(b) the Lessee's purchase of a Property or Properties pursuant to
Section 15.4, 16.2 or 17.6 of the Lease, or
(c) payment of the Property Balance in accordance with Section
15.4, Section 16.2(b), Section 20.1, or Section 22.3(b) of the
Lease,
shall be distributed by the Indenture Trustee in the following order of
priority:
first, an amount equal to the Facility Lender Property Balance
with respect to such Property and all accrued and unpaid interest
thereon shall be distributed to the Noteholders, with a corresponding
reduction in the principal and interest due on the Loan, such amount to
be paid pro rata to the Noteholders in accordance with the terms of the
Indenture of Trust, and
second, an amount equal to the Lessor Property Balance with
respect to such Property and all accrued and unpaid Certificate
Earnings thereon shall be distributed to the Lessor, and the Lessor
Investment Amount and accrued and unpaid Certificate Earnings
thereunder shall be reduced by such amount, provided, however, that if
a Loan Agreement Default under Section 5(a) or (e) of the Loan
Agreement or a Loan Agreement Event of Default shall have occurred and
be continuing, any such payments which would otherwise be paid to the
Lessor pursuant to clause second of this Section 5.3 shall be instead
held in the Cash Collateral Account until the earliest to occur of (i)
the first date thereafter on which all such Loan Agreement Defaults and
Loan Agreement Events of Default shall have been cured (in which case
such payment under clause second shall then be made), (ii) the date of
any acceleration of the Loan (in which case such payment shall then be
applied in the manner contemplated by Section 5.8), or (iii) the 180th
day after the occurrence of such Loan Agreement Default or Loan
Agreement Event of Default (in which case such payment under clause
second shall then be made); provided, further, that notwithstanding the
disposition of any prior installment of Lessor Basic Rent under this
clause second, each time an installment of Lessor Basic Rent is
received by the Indenture Trustee, distribution of such funds shall be
made pursuant to this clause second, subject to the terms of the
immediately preceding proviso.
SECTION 5.4. Residual Value Guaranty. Subject to Section 5.8, the
Residual Value
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Guaranty paid by Lessee pursuant to Article XXII of the Lease shall be
distributed by the Indenture Trustee on the Lease Termination Date to the
Noteholders in accordance with the terms of the Indenture of Trust, with a
corresponding reduction in the Loan.
No amount of the Residual Value Guaranty shall be applied pursuant to
this Section 5.4 to reduce any portion of the Lessor Investor Amount.
SECTION 5.5. Sales Proceeds of Remarketing of Properties. Subject to
Section 5.8, any payments received by the Indenture Trustee as Gross Proceeds
from the sale of the Properties sold pursuant to Lessee's exercise of the
Remarketing Option pursuant to Article XXII of the Lease or otherwise sold by
Indenture Trustee, or following the repayment in full of all of the Fixed Rate
Notes and the termination of the Master Assignment, the Facility Lender or
Lessor, together with any payment made by Lessee as a result of an indemnity
payment pursuant to Section 13.4, shall be distributed by Indenture Trustee,
Facility Lender or Lessor, as the case may be, on the Lease Termination Date (or
following the Lease Termination Date, upon receipt), in the following order of
priority:
first, to the Noteholders in an amount sufficient to repay the
outstanding Fixed Rate Notes in full, including all accrued interest
and Premium thereon, if any, (with a corresponding reduction in the
Loan) such amount to be paid pro rata to the Noteholders in accordance
with the Indenture of Trust,
second, the balance, if any, to be distributed to the Lessor
to be applied to payment of Certificate Earnings and overdue interest
and to repay the Lessor Investment Amount, and
third, the balance, if any, shall be distributed to the Lessee
to the extent permitted by Section 5.12;
provided, however, that if a Loan Agreement Default under Section 5(a) or (e) of
the Loan Agreement or a Loan Agreement Event of Default shall have occurred and
be continuing, any such payments which would otherwise be paid to the Lessor
pursuant to clause second of this Section 5.6 shall be instead held in the Cash
Collateral Account until the earliest to occur of (i) the first date thereafter
on which all such Loan Agreement Defaults and Loan Agreement Events of Default
shall have been cured (in which case such payment under clause second shall then
be made), (ii) the date of any acceleration of the Loan (in which case such
payment shall then be applied in the manner contemplated by Section 5.8), or
(iii) the 180th day after the occurrence of such Loan Agreement Default or Loan
Agreement Event of Default (in which case such payment under clause second shall
then be made); provided, further, that notwithstanding the disposition of any
prior installment of Lessor Basic Rent under clause second, each time an
installment of Lessor Basic Rent is received by the Indenture Trustee,
distribution of such funds shall be made pursuant to clause second, subject to
the terms of the immediately preceding proviso.
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To the extent that any amounts received pursuant to this Section 5.5
relate to a specific Property, the Property Balance relating to such Property
shall be deemed to be reduced by the amounts applied pursuant hereto, with a
corresponding reduction in the principal amount of the Note and Lessor
Investment Amount.
SECTION 5.6. Supplemental Rent. Subject to Section 5.7, all payments of
Supplemental Rent received by the Indenture Trustee (excluding any amounts
payable pursuant to the preceding provisions of this Section 5) shall be
distributed promptly by the Indenture Trustee upon receipt thereof to the
Persons entitled thereto pursuant to the Operative Documents.
SECTION 5.7. Excepted Payments. Notwithstanding any other provision of
this Participation Agreement or the Operative Documents, any Excepted Payment
received at any time by the Indenture Trustee or any Participant shall, subject
to the penultimate sentence of Section 5.1, be distributed promptly to the
Person entitled to receive such Excepted Payment.
SECTION 5.8. Distribution of Payments after Lease Event of Default or
Loan Agreement Event of Default. (a) Subject to Section 5.6, all payments (other
than Excepted Payments) received and amounts realized or held by the Indenture
Trustee, Facility Lender or Lessor after a Lease Event of Default has occurred
and is continuing, including proceeds from the sale of any of the Properties or
other collateral, proceeds of any amounts from any insurer or any Governmental
Authority in connection with any Casualty or Condemnation, from the Lessee as
payment in accordance with the Lease, including any payment received from the
Lessee pursuant to Section 17 of the Lease (but excluding Section 17.6 of the
Lease), or from the Guarantor pursuant to the Guaranty shall, be paid to the
Indenture Trustee as promptly as possible and shall be distributed by Indenture
Trustee in the following order of priority:
first, so much of such payment or amount as shall be required
to reimburse the Indenture Trustee or the Noteholders for any tax,
expense or other loss incurred by the Indenture Trustee or the
Noteholders in connection with the collection of such amounts (to the
extent not previously reimbursed) shall be distributed to the Indenture
Trustee or the Noteholders, as applicable (to be divided amongst such
parties pro rata to the extent insufficient to satisfy all claims);
second, so much of such amount as shall be required to pay in
full the outstanding principal amount, and all accrued interest and
premium, if any, on the Fixed Rate Notes shall be distributed on a pro
rata basis to the Noteholders in accordance with the terms of the
Indenture of Trust with a corresponding reduction of amounts due with
respect to the Loan;
third, so much of such amount as shall be required to
reimburse the Facility Lender
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or the Lessor for any tax, expense or other loss incurred by the
Facility Lender or the Lessor in connection with the collection of such
amounts (to the extent not previously reimbursed) shall be distributed
to the Facility Lender or the Lessor, as applicable (to be divided
amongst such parties pro rata to the extent insufficient to satisfy all
claims);
fourth, so much of such amount or amounts as shall be required
to pay in full the Participant Balance of Lessor shall be distributed
to the Lessor; and
fifth, the balance, if any, of such payment or amounts
remaining thereafter shall be promptly distributed to, or as directed
by, the Lessor, pursuant to the Operative Documents.
(b) During the occurrence and continuance of a Loan Agreement Event of
Default if the Loan has been accelerated, all amounts (other than Excepted
Payments) received or realized by any Participant and otherwise distributable
pursuant to Sections 5.2 and 5.3 shall be distributed as provided for in Section
5.8 (a) above except that if such Loan Agreement Default does not arise out of,
or is not attributable to a Lease Event of Default, clause fifth shall, subject
to Section 5.12, be directed by the Lessee.
SECTION 5.9. Other Payments. (a) Except as otherwise provided in this
Section 5 and paragraph (b) below,
(i) any payment received by Indenture Trustee for which no
provision as to the application thereof is made in the Operative
Documents or elsewhere in this Section 5, and
(ii) all payments received and amounts realized by any
Participant under the Lease or otherwise with respect to the Properties
to the extent received or realized at any time after payment in full of
the Participant Balances of all of the Participants and any other
amounts due and owing to the Lessor, Facility Lender, Noteholders or
the Indenture Trustee,
shall be distributed forthwith by the Indenture Trustee in the order of priority
set forth in Section 5.3 (in the case of any payment described in clause (i)
above) or in Section 5.8 hereof (in the case of any payment described in clause
(ii) above).
(b) Except as otherwise provided in this Section 5 hereof and except
after a Lease Event of Default has occurred and is continuing, any payment
received by the Indenture Trustee for which provision as to the application
thereof is made in an Operative Document but not elsewhere in this Section 5
shall be distributed forthwith by the Indenture Trustee to the Person and for
the purpose for which such payment was made in accordance with the terms of such
Operative Document.
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SECTION 5.10. Casualty and Condemnation Amounts. Any amounts payable to
the Indenture Trustee, Lessor or Facility Lender as a result of a Casualty or
Condemnation pursuant to Section 15.1 of the Lease (but excluding any amounts
payable pursuant to Section 16.2 of the Lease) shall, if no Lease Event of
Default exists, be paid over to the Lessee to reimburse Lessee for any amounts
expended by Lessee for the rebuilding or restoration of the Property to which
such Casualty or Condemnation applied, and any excess proceeds shall be paid in
accordance with the Lease. If a Lease Event of Default exists, then during the
continuance of such Lease Event of Default, all such amounts shall be held by
the Indenture Trustee in the Cash Collateral Account and upon exercise of the
Indenture Trustee's remedies under the Operative Documents shall be distributed
pursuant to Section 5.8.
SECTION 5.11. Order of Application. To the extent any payment made to
any Participant pursuant to Sections 5.2, 5.3, 5.4, 5.5 or 5.8 is insufficient
to pay in full (without duplication) the Participant Balance of such
Participant, then each such payment shall first be applied to overdue interest,
then to accrued interest and premium, if any, and then to principal.
SECTION 5.12. Remaining Funds. Upon the payment in full of (i) the
Fixed Rate Notes (and the Note), including all interest and premium, if any,
owing with respect thereto and the Lessor Investment Amount, including principal
and all accrued and unpaid Certificate Earnings, and (ii) all amounts owing by
the Lessee or Guarantor to any Person under the Operative Documents, all
remaining moneys in the Cash Collateral Account shall be paid to the Lessee.
SECTION 5.13. Time of Payment. Each payment due from Lessee or
Guarantor under the Operative Documents shall be made prior to 2:00 p.m. (New
York time) on the date when due in immediately available funds consisting of
lawful currency of the United States of America, unless such date shall not be a
Business Day, in which case payment shall be made on the next succeeding
Business Day. Payments received after 2:00 p.m. (New York time) shall be deemed
received on the next succeeding Business Day.
SECTION 6.
CERTAIN INTENTIONS OF THE PARTIES
Anything else herein, in any other Operative Document, or elsewhere to
the contrary notwithstanding, it is the intention of Guarantor, the Lessee, the
Lessor, the Facility Lender and the Indenture Trustee (and, assuming enforcement
of the Operative Documents in accordance with their terms, it is the
representation and warranty of the Guarantor and the Lessee) that: (i) the
amount and timing of installments of Basic Rent due and payable from time to
time from the Lessee under the Lease shall be equal to the aggregate payments
due and payable for interest on the Loan and Certificate Earnings on the Lessor
Investment Amount on each Payment Date and
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that such interest amount payable on the Loan shall at all times equal the
aggregate accrued interest on the principal amount of the Fixed Rate Notes; (ii)
if the Lessee elects the Lease Termination Date Purchase Option or becomes
obligated to purchase any Property under the Lease, the Loan, the Lessor
Investment Amount, all interest, Certificate Earnings and Premium related to
such Property and all other obligations of the Lessee owing to the Lessor, the
Facility Lender, the Noteholders and the Indenture Trustee relating thereto
shall be paid in full by the Lessee so that the aggregate Property Costs shall
at all times equal the sum of (x) the Principal Amount of the Fixed Rate Notes,
plus (y) the Lessor Investment Amount not previously prepaid; (iii) if the
Lessee properly elects the Remarketing Option with respect to a Property and
provided that no Lease Event of Default has occurred and is continuing, Lessee
shall only be required to pay to the Lessor the Gross Proceeds of the sale of
such Property, the Residual Value Guaranty for such Property, any amounts
payable pursuant to Section 13 of this Participation Agreement and any Rent with
respect to such Property (which aggregate amounts may be less than the Property
Balance under the Lease with respect to such Property); and (iv) upon a Lease
Event of Default, the amounts then due and payable by the Lessee under the Lease
shall include the Lease Balance which shall be sufficient to repay the Fixed
Rate Notes and Lessor Investment Amount in full.
SECTION 7.
CONDITIONS PRECEDENT TO
CLOSING DATE
SECTION 7.1. Conditions Precedent -- Documentation. The obligations of
the Lessor and Facility Lender on the Closing Date are subject to satisfaction
of the following conditions precedent and to the conditions precedent set forth
in Section 7.2:
(a) Operative Documents. Each of the Operative Documents to be entered
into on the Closing Date shall have been duly authorized, executed and delivered
by the parties thereto, and shall be in full force and effect, including (i)
this Participation Agreement, (ii) the Lease, (iii) the Loan Agreement, (iv) the
Note, (v) the Indenture of Trust, (vi) the Fixed Rate Notes, (vii) the
Assignment of Lease (together with all supplemental assignments, the "Assignment
of Lease"), from the Lessor to the Facility Lender, and consented to by Lessee
pursuant to that certain Lessee's Consent, dated as of the Closing Date (the
"Consent to Assignment") by Lessee, in favor of the Facility Lender, in each
case, substantially in the respective forms set forth as Exhibit D to this
Agreement, with such modifications thereto as local law or custom may indicate
and are agreed to by the participants, (viii) the Guaranty, (ix) the Master
Assignment (together with all supplemental assignments, the "Master Assignment")
from the Facility Lender to the Indenture Trustee for the benefit of the
Noteholders, and consented to by the Lessor and Lessee pursuant to that certain
Consent to Master Assignment, dated as of the Closing Date (the "Consent to
Master Assignment") by the Lessor and the Lessee in favor of the Indenture
Trustee for the benefit of the Noteholders,
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and the Lessor, Lessee, the Indenture Trustee and the Facility Lender shall each
have received a fully executed copy of each of the Operative Documents.
(b) No Default. No Default or Event of Default shall exist (both before
and after giving effect to the transactions contemplated by the Operative
Documents).
(c) Recordation of Documents. The Operative Documents (or memoranda
thereof), any supplements thereto and any financing statements in connection
therewith required under the Uniform Commercial Code shall have been recorded,
registered and filed, if necessary, in such manner as to enable Lessee's counsel
to render its opinion referred to in clause (e) below and local counsel to
render the opinions required by Section 7.2(f).
(d) Taxes. All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Documents shall have been paid or provisions for such payment shall have been
made to the satisfaction of the Lessor, Facility Lender and the Initial
Purchasers.
(e) Opinion of Counsel. King & Spalding, counsel to Guarantor and
Lessee, shall have issued to the Lessor, the Indenture Trustee, the Noteholders
and the Facility Lender its opinion to the effect and in the form set forth on
Exhibit A attached to this Agreement.
(f) Governmental Approvals. All necessary (or, in the reasonable
opinion of the Lessor or the Indenture Trustee or any of their respective
counsel advisable) Governmental Actions, in each case required by any
Requirement of Law, shall have been obtained or made and be in full force and
effect.
(g) Litigation. No action or proceeding shall have been instituted, nor
shall any action or proceeding be threatened, before any Governmental Authority,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Participation Agreement, any other
Operative Document or any transaction contemplated hereby or thereby or (ii)
which could have a Material Adverse Effect.
(h) Requirements of Law. The transactions contemplated by the Operative
Documents do not and will not violate any applicable Requirement of Law and do
not and will not subject the Lessor, the Facility Lender, the Indenture Trustee
or any Noteholder to any adverse regulatory prohibitions or constraints.
(i) Officer's Certificate of Guarantor and Lessee. The Lessor, the
Facility Lender and the Indenture Trustee shall each have received an Officer's
Certificate, dated as of the Closing Date, of each of Guarantor and Lessee
stating that (i) each and every representation and warranty of Guarantor or
Lessee, as the case may be, contained in the Operative Documents to which it is
a
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party is true and correct on and as of the Closing Date; (ii) no Default or
Event of Default has occurred and is continuing under any Operative Document;
(iii) each Operative Document to which Guarantor or Lessee, as the case may be,
is a party is in full force and effect with respect to it; and (iv) Guarantor or
Lessee, as the case may be, has duly performed and complied with all covenants,
agreements and conditions contained herein or in any Operative Document required
to be performed or complied with by it on or prior to the Closing Date.
(j) Guarantor and Lessee's Resolutions and Incumbency Certificate, etc.
The Lessor, the Facility Lender and the Indenture Trustee shall each have
received (i) a certificate of the Secretary or an Assistant Secretary of each of
Guarantor and Lessee attaching and certifying as to (A) the resolutions of the
Board of Directors duly authorizing the execution, delivery and performance by
Guarantor or Lessee, as the case may be, of each Operative Document to which it
is or will be a party, (B) its certificate of incorporation and bylaws, in each
case certified as of a recent date by the Secretary of State of Delaware, and
(C) the incumbency and signature of persons authorized to execute and deliver on
its behalf the Operative Documents to which it is a party, and (ii) a good
standing certificate from the appropriate officer of the state in which such
Person is incorporated and the state in which such Person's principal place of
business is located.
(k) Officer's Certificate of Facility Lender. Lessee, Guarantor, the
Indenture Trustee and the Lessor shall have received an Officer's Certificate of
the Facility Lender, dated as of the Closing Date, stating that (i) each and
every representation and warranty of the Facility Lender contained in the
Operative Documents to which it is a party is true and correct on and as of the
Closing Date, (ii) each Operative Document to which the Facility Lender is a
party is in full force and effect with respect to it, and (iii) the Facility
Lender has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Document required to be
performed or complied with by it on or prior to the Closing Date.
(l) Facility Lender's Resolutions and Incumbency Certificate. etc.
Lessee, Guarantor, the Indenture Trustee and the Lessor shall have received a
certificate of the Secretary or an Assistant Secretary of the Facility Lender
attaching and certifying as to (A) the resolutions of the Board of Directors
duly authorizing the execution, delivery and performance by the Facility Lender
of each Operative Document to which it is or will be a party, (B) its articles
of incorporation, certified as of a recent date by the Secretary of State of the
State of its incorporation, (C) its by-laws and (D) the incumbency and signature
of persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party.
(m) Opinions of Counsel to Facility Lender. Ropes & ▇▇▇▇, counsel to
the Facility Lender and Hunton & ▇▇▇▇▇▇▇▇, special counsel to the Facility
Lender, shall have issued to Lessee, Guarantor, Lessor and the Indenture Trustee
their opinion to the effect and in the form set forth on Exhibit B attached to
this Agreement.
(n) Officer's Certificate of Lessor. Lessee, Guarantor, the Indenture
Trustee and the
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Facility Lender shall have received an Officer's Certificate of the Lessor,
dated as of the Closing Date, stating that (i) each and every representation and
warranty of the Lessor contained in the Operative Documents to which it is a
party is true and correct on and as of the Closing Date, (ii) each Operative
Document 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 Document required
to be performed or complied with by it on or prior to the Closing Date.
(o) Lessor's Partnership Certificate, etc. Lessee, Guarantor, the
Indenture Trustee and the Facility Lender shall have received a certificate of
the Secretary or an Assistant Secretary of the Lessor attaching and certifying
as to (A) the resolutions of the Board of Directors of its general partner and
other evidence of partner approval duly authorizing the execution, delivery and
performance by the Lessor of each Operative Document to which it is or will be a
party, (B) its certificate of limited partnership, certified as of a recent date
by the Secretary of State of the State of its organization, (C) its partnership
agreement and (D) the incumbency and signature of persons authorized to execute
and deliver on its behalf the Operative Documents to which it is a party.
(p) Opinion of Counsel to Lessor. Hunton & ▇▇▇▇▇▇▇▇, counsel to the
Lessor, shall have issued to Lessee, the Guarantor, the Facility Lender and the
Indenture Trustee their opinion to the effect and in the form set forth on
Exhibit C attached to this Agreement and made a part hereof by this reference.
(q) Rating of Fixed Rate Notes. ▇▇▇▇▇'▇ and/or S&P shall have issued a
rating of the Fixed Rate Notes as of the Closing Date satisfactory to satisfy
the requirements of the Indenture of Trust and all conditions precedent to the
issuance of the Fixed Rate Notes under the Indenture of Trust shall have been
satisfied or waived.
(r) Pay-Off of Existing Indebtedness; Release of Liens. Existing
Indebtedness shall have been repaid in full, all mortgages, deeds of trust and
other Liens against the Properties securing the Existing Indebtedness shall have
been released or removed and all of the existing leases on the Properties
executed in connection with the Existing Indebtedness shall have been
terminated.
(s) Note Purchase Agreement. The satisfaction or waiver by the Initial
Purchasers of all conditions to the closing of the transactions contemplated by
the Purchase Agreement.
SECTION 7.2. Conditions Precedent -- Properties. The obligation of the
Lessor and Facility Lender on the Closing Date are subject to satisfaction of
the following conditions precedent with respect to each Property listed on
Appendix 2 hereto and to the conditions precedent set forth in Section 7.1:
(a) Environmental Audits. An Environmental Audit for each Property
shall have been delivered to and shall be reasonably
satisfactory in form and substance to the Initial
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Purchasers and the Lessor.
(b) Appraisals. An Appraisal of each Property shall have been
delivered to and shall be reasonably satisfactory to the
Initial Purchasers and the Lessor.
(c) Memoranda of Lease. The Lessee and the Lessor shall have
delivered an original counterpart of the Lease Supplement and
a Memorandum of Lease (in form suitable for recording in the
state in which such Property is located) executed by the
Lessee and the Lessor with respect to each Property listed on
Appendix 2 hereto to the Indenture Trustee, with a copy to the
Facility Lender.
(d) Mortgages. The Lessor shall have delivered to the Indenture
Trustee a Mortgage executed by the Lessor with respect to such
Property, together with accompanying UCC fixture filings (in
form suitable for recording in the state in which such
Property is located).
(e) Assignment of Lease. The Lessor shall have delivered to the
Indenture Trustee a supplement to Assignment of Lease and the
Assignment of Lease executed by the Lessor with respect to the
Properties, together with a consent to the Assignment of Lease
and Supplement of Assignment of Lease executed by the Lessee
with respect to each Property.
(f) Opinion of Local Counsel. The Indenture Trustee, the Lessor
and the Facility Lender shall have received an opinion of
counsel, which counsel and whose opinion shall be reasonably
satisfactory to the Initial Purchasers and the Lessor and
which shall be qualified with respect to the laws of the
jurisdiction in which such Property is located.
(g) Survey. The Lessee shall have delivered a survey of each of
the Properties, to the Lessor and the Initial Purchasers in
form and substance reasonably satisfaction to them.
(h) Title Insurance Policy. The Lessee shall deliver, or cause to
be delivered, to the Indenture Trustee, the Facility Lender,
and the Lessor an ALTA extended leaseholder's (with respect to
Lessee) and lender's (with respect to the Facility Lender and
the Indenture Trustee) title insurance commitment covering
such Property in favor of the Indenture Trustee, the Facility
Lender, and the Lessee reasonably satisfactory in form and
substance to the Initial Purchasers, Facility Lender and
Lessor, with customary coverage over the general exceptions to
such policy and customary endorsements issued by the title
company and evidencing the first priority status of the
Mortgage, subject only to the exceptions noted therein.
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(i) Evidence of Completion. Completion shall have been reached
with respect to each Property and each Property shall be ready
for occupancy and operation and shall be free and clear of all
Liens except for Permitted Liens.
(j) Representations and Warranties. On such date the
representations and warranties of Guarantor and Lessee
contained herein and in each of the other Operative Documents
shall be true and correct in all material respects as though
made on and as of such date, except to the extent such
representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall
have been true and correct in all material respects as of such
earlier date.
(k) Performance by Other Parties. The other parties hereto shall
have performed their respective agreements contained herein
and in the other Operative Documents to be performed by them
on or prior to such date.
(l) No Default. There shall not have occurred and be continuing
any Default or Event of Default and not Default or Event of
Default will have occurred after giving effect to the
transactions contemplated hereby.
SECTION 7.3. INTENTIONALLY OMITTED.
SECTION 7.4. Conditions Precedent to Substitution of Properties. In
addition to Section 16.3 and Article XV of the Lease and the other requirements
of the Operative Documents in connection with the substitution of any
Replacement Property pursuant to the terms of the Lease, the Lessee's right to
substitute a Replacement Property is subject to the following requirements on
the part of the Lessee to be completed as of the date of such substitution:
(a) Environmental Audits. An Environmental Audit for such
Replacement Property shall have been delivered to and shall be
reasonably satisfactory in form and substance to the Lessor
and prepared in a manner consistent with the customary and
usual practices that Lessee and the Guarantor utilize with
respect to all other real properties owned or leased by Lessee
and the Guarantor.
(b) Appraisals. An Appraisal of such Property shall have been
delivered to and shall be reasonably satisfactory to the
Lessor and prepared in a manner consistent with the customary
and usual practices that Lessee and the Guarantor utilizes
with respect to all other real properties owned or leased by
Lessee and the Guarantor.
(c) Lease Supplement and Memoranda of Lease. The Lessee and the
Lessor shall have delivered an original counterpart of a Lease
Supplement and a Memorandum of Lease (in form suitable for
recording in the state in which such Property is located)
executed by the Lessee and the Lessor with respect to such
Replacement Property
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to the Indenture Trustee, with a copy to the Facility Lender.
(d) Supplement to Assignment of Lease and Master Assignment. The
Lessor and the Facility Lender shall have executed and
delivered to the Indenture Trustee a Supplement to Assignment
of Lease and a Supplement to Master Assignment in form
suitable for recording in the state where such Replacement
Property is located, together with a consent of Lessee and the
Facility Lender with respect thereto.
(e) Mortgages. The Lessor shall have delivered to the Indenture
Trustee a Mortgage executed by the Lessor with respect to such
Replacement Property, together with accompanying UCC fixture
filings (in form suitable for recording in the state in which
such Property is located).
(f) Opinion of Local Counsel. The Indenture Trustee, the Lessor
and the Facility Lender shall have received an opinion of
counsel, which counsel and whose opinion shall be reasonably
satisfactory to the Lessor and qualified with respect to the
laws of the jurisdiction in which such Replacement Property is
located.
(g) Survey. The Lessee shall have delivered a survey of such
Replacement Property to the Lessor in form and substance
reasonably satisfaction to Lessor and prepared in a manner
consistent with the customary and usual practices that Lessee
and the Guarantor utilizes with respect to all other real
properties owned or leased by Lessee and the Guarantor.
(h) Title Insurance Policy. The Lessee shall deliver, or cause to
be delivered, to the Indenture Trustee, the Facility Lender
and the Lessor an ALTA extended leasehold owner's (with
respect to Lessee) and lender's (with respect to the Facility
Lender and the Indenture Trustee) title insurance commitment
covering such Replacement Property in favor of the Indenture
Trustee, the Facility Lender and the Lessee reasonably
satisfactory in form and substance to the Facility Lender and
Lessor, with customary coverage over the general exceptions to
such policy and customary endorsements issued by the title
company and evidencing the first priority status of the
Mortgage, subject only to the exceptions noted therein.
(i) Evidence of Completion. Completion shall have been reached
with respect to such Replacement Property and such Property
shall be ready for occupancy and operation and shall be free
and clear of all Liens except for Permitted Liens.
(j) Opinion of Counsel. The Lessee shall deliver an opinion of
counsel to Lessor substantially in the form and to the effect
set forth on Exhibit H to this Agreement.
(k) Limit on Substitution. The Replacement Property shall be a
warehouse-style retail
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home improvement center which (1) is located in a
substantially similar locale, based on a current market
analysis, and in the same region of the United States to the
Property to be released, and (2) has a substantially similar
appraised value as determined by an Appraiser based on
projected net cash flow (after reserves) at stabilized
occupancy (assuming the Lease has been terminated and the
Lessee is not available as a tenant of the Replacement
Property or the Property to be released) as the Property to be
released and any substitution pursuant to the Lease shall be
permitted only where the aggregate Property Costs of the
Properties remaining subject to the Lease after giving effect
to the proposed substitution (exclusive of any Replacement
Properties that previously became subject to the Lease
pursuant to Section 16.3 or Article XV thereof) is not less
than the Permitted Amount.
SECTION 8.
REPRESENTATIONS
SECTION 8.1. Representations of the Lessor. Lessor represents and
warrants to each of the other parties hereto as follows:
(a) Due Organization; etc. It is a limited partnership duly
organized and validly existing and in good standing under the
laws of the State of Delaware and has the power and authority
to enter into and perform its obligations under the Operative
Documents to which it is or will be a party and each other
agreement, instrument and document to be executed and
delivered by it in connection with or as contemplated by each
such Operative Document to which it is or will be a party. It
is duly qualified to transact business in every jurisdiction
where the failure to qualify would have a material adverse
effect on its ability to perform its obligations under the
Operative Documents as contemplated on the Closing Date.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Document to which it is or will
be a party, has been duly authorized by all necessary action
on its part and on the part of its general partner and neither
the execution and delivery thereof, nor the consummation of
the transactions contemplated thereby, nor compliance by it
with any of the terms and provisions thereof (i) does or will
require any approval or consent of any trustee or holders of
any of its indebtedness or obligations or those of its general
partner, (ii) does or will contravene any current law,
governmental rule or regulation relating to it or its general
partner, (iii) does or will contravene or result in any breach
of or constitute any default under, or result in the creation
of any Lien upon any of it or its general partner's property
under its partnership agreement or any Contractual Obligation
of the Lessor or its general partner, or (iv) does or will
require any Governmental Action by any Governmental Authority.
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(c) Enforceability; etc. Each Operative Document to which the
Lessor is or will be a party has been, or on or before any
Closing Date on which such Operative Document is to be signed
will be, duly executed and delivered by the Lessor and each
such Operative Document to which the Lessor is a party
constitutes, or upon execution and delivery will constitute,
assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto, a legal,
valid and binding obligation enforceable against the Lessor in
accordance with the terms thereof, except as such
enforceability may be limited or denied by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws effecting creditors' rights and the enforcement of
debtors' obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
(d) Litigation. There is no action or proceeding pending or, to
Lessor's knowledge, threatened to which it or, to the best of
its knowledge, its general partner is or will be a party,
before any Governmental Authority that, if adversely
determined, could reasonably be expected to have a material
adverse effect on the property, operations or financial
condition of the Lessor or, to the best of its knowledge, its
general partner.
(e) Assignment. It has not assigned or transferred any of its
right, title or interest in or under the Lease or the Guaranty
except in accordance with the Operative Documents.
(f) Defaults. No Default or Event of Default under the Operative
Documents attributable to it has occurred and is continuing.
(g) Securities Act. Neither the Lessor nor any Person authorized
by the Lessor to act on its behalf has offered or sold any
interest in the Lessor Investment Amount or the Note, or in
any similar security relating to a Property, or in any
security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering
as the offering of the aforementioned securities to, or
solicited any offer to acquire any of the same from, any
Person other than the parties hereto and neither the Lessor
nor any Person authorized by the Lessor to act on its behalf
will take any action which would subject the issuance or sale
of any interest in the Lessor Investment Amount or the Note to
the provisions of Section 5 of the Securities Act or require
the qualification of any Operative Document under the Trust
Indenture Act.
(h) Chief Place of Business. The Lessor's chief place of business,
chief executive office and office where the documents,
accounts and records relating to the transactions
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contemplated by this Participation Agreement and each other
Operative Document are kept are located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(i) Federal Reserve Regulations. The Lessor is not engaged
principally in, and does not have as one of its important
activities, the business of extending credit for the purpose
of purchasing or carrying any margin stock (within the meaning
of Regulation U of the Federal Reserve Board).
(j) Investment Company Act. The Lessor is not an "investment
company" or a company controlled by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(k) General Partner. Credit Suisse First Boston is the sole
general partner of the Lessor.
SECTION 8.2. Representations of the Guarantor and the Lessee. Each of
the Guarantor and the Lessee represents and warrants to each of the other
parties hereto that:
(a) Corporate Existence and Power. Each of the Guarantor and the
Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to"transact business in every
jurisdiction where each Property is located (in the case of
Lessee) and where the failure to so qualify would reasonably
be expected to have or cause a Material Adverse Effect, and
has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted, except where the failure to
possess any such licenses, authorizations, consents, or
approvals would not reasonably be expected to have or cause a
Material Adverse Effect.
(b) Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each of the
Guarantor and the Lessee of this Participation Agreement and
the other Operative Documents to which it is a party (i) are
within its corporate powers, (ii) have been duly authorized by
all necessary corporate action, (iii) require no Governmental
Action by or in respect of or filing with, any Governmental
Authority, (iv) do not contravene, or constitute a default
under, any Applicable Law or of the certificate of
incorporation or by-laws of the Guarantor, Lessee, or of any
material agreement, judgment, injunction, order, decree or
other instrument binding upon the Guarantor or the Lessee, and
(v) do not result in the creation or imposition of any Lien on
any asset of the Guarantor or the Lessee.
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(c) Binding Effect. This Participation Agreement constitutes a
valid and binding agreement of each of the Guarantor and the
Lessee enforceable in accordance with its terms, and the other
Operative Documents to which it is, or will become a party,
when executed and delivered in accordance with this
Participation Agreement, will constitute valid and binding
obligations of the Guarantor or Lessee enforceable in
accordance with their respective terms, provided that the
enforceability hereof and thereof is subject in each case to
general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights
generally.
(d) Trust Indenture Act. Assuming that the Initial Purchasers'
representations and warranties contained in the Purchase
Agreement are true and assuming compliance by the Initial
Purchasers with the covenants set forth in Section 4 of the
Purchase Agreement, it is not necessary in connection with the
offer, sale and delivery of the Fixed Rate Notes in the manner
contemplated by the Indenture of Trust to register the Fixed
Rate Notes under the Securities Act or to qualify the
Indenture or Trust under the United States Trust Indenture Act
of 1939 (the "Trust Indenture Act").
(e) Rule 144 A Representations. (i) When the Fixed Rate Notes are
issued and delivered pursuant to the Indenture of Trust, such
Fixed Rate Notes will not be of the same class (within the
meaning of Rule 144A) as securities of the Guarantor which are
listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system; (ii) the Guarantor is not
subject to Section 13 or 15(d) of the Exchange Act; (iii) the
Guarantor is not an open-end investment company, unit
investment trust or face-amount certificate company that is or
is required to be registered under Section 8 of the United
States Investment Company Act of 1940 (the "Investment Company
Act"); (iv) neither the Guarantor nor any affiliate (as
defined in Rule 501 (b) under the Securities Act) of the
Guarantor has, directly or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act)
which is or will be integrated with the sale of the Fixed Rate
Notes in a manner that would require the registration of the
Fixed Rate Notes under the Securities Act; and (v) neither the
Guarantor nor any person acting on its behalf (other than the
Initial Purchasers, as to which the Guarantor makes no
representation) has engaged or will engage, in connection with
the offering of the Fixed Rate Notes, in any form of general
solicitation or general advertising within the meaning of Rue
502(c) under the Securities Act, or with respect to Fixed Rate
Notes sold in reliance on Rule 903 ("Rule 903") under the
Securities Act, in any directed selling efforts within the
meaning of Rule 903 with respect to the Fixed Rate Notes and
each of them has complied and will comply with the offering
restrictions requirement of Regulation S.
(f) No Default. Neither the Guarantor nor any of its Subsidiaries
is in default under or
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with respect to any agreement, instrument or undertaking to
which it is a party or by which it or any of its property is
bound which could reasonably be expected to have or cause a
Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
(g) Environmental Matters. (i) Neither the Guarantor nor any
Subsidiary is subject to any claim under the Environmental
Laws with respect to the Properties which could have or cause
a Material Adverse Effect and neither the Guarantor nor any
Subsidiary has been designated as a potentially responsible
party under CERCLA or under any state statute similar to
CERCLA. None of the Properties has been identified on any
current or proposed (x) National Priorities List under 40
C.F.R. ss. 300, (y) CERCLIS list or (z) any list arising from
a state statute similar to CERCLA.
(ii) No Hazardous Substances have been or are being
used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are
otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of the Guarantor and Lessee, at or
from any adjacent site or facility, except for Hazardous
Substances, such as cleaning solvents, pesticides and other
materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed, or
otherwise handled in minimal amounts in the ordinary course of
business in compliance with all applicable Environmental Laws.
(iii) Each of the Guarantor and each of its
Subsidiaries and Affiliates, (x) has procured all permits and
authorizations required under the Environmental Laws necessary
for the conduct of its business on the Properties, and (y) is
in compliance with all Environmental Laws in connection with
the operation of the Properties and the Guarantor's and each
of its Subsidiary's and Affiliate's, respective businesses, in
each case set forth in either of clause (x) or (y) where the
failure to procure or non-compliance with which would
reasonably be expected to have or cause a Material Adverse
Effect.
(h) Facility Lender. The representations and warranties of the
Facility Lender, set forth in the Operative Documents
(including the representations and warranties set forth in
Sections 8.4) are true and correct in all material respects
and the Facility Lender is in compliance with its obligations
under the Operative Documents.
(i) Disclosure. All written information heretofore furnished by
the Guarantor or the Lessee to the Facility Lender, Indenture
Trustee, Initial Purchasers or Lessor for purposes of or in
connection with this Participation Agreement or any
transaction contemplated hereby is, and all such information
hereafter furnished by the
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Guarantor or the Lessee to the Facility Lender, Indenture
Trustee, any Noteholder or Lessor will be, true and correct in
all material respects or based on what the Guarantor or the
Lessee in good faith believes to be reasonable estimates on
the date as of which such information is stated or certified.
(j) No Litigation. There is no action, suit or proceeding pending,
or to the knowledge of the Guarantor or Lessee, threatened,
against or affecting the Guarantor, Lessee or any of their
Subsidiaries, before any court or arbitrator or any
Governmental Authority which would reasonably be expected to
have or cause a Material Adverse Effect.
SECTION 8.3. Representations of Guarantor and Lessee as to Properties.
Each of the Guarantor and the Lessee hereby represents and warrants as of the
Closing Date with respect to each Property, as follows:
(a) Property. Each Property consists of Land on which a Facility
has been constructed. Such Property is located in the
continental United States.
(b) Insurance. Lessee has obtained insurance coverage covering
such Property or is self-insured in a manner which meets the
requirements of Article XIV of the Lease, and such coverage is
in full force and effect.
(c) Lease. Upon the execution and delivery of a Lease Supplement
to the Lease and Memorandum of Lease, (i) Lessee will have
unconditionally accepted the Land and existing Improvements
subject to such Lease Supplement and will have good and
marketable title to a valid and subsisting leasehold interest
in the Land and existing Improvements, subject only to
Permitted Exceptions, (ii) no offset will exist with respect
to any Rent or other sums payable under the Lease and (iii) no
Rent under the Lease will have been prepaid.
(d) Protection of Interests. Upon recordation, each Mortgage and
each Supplement to Assignment of Lease delivered on the
Closing Date will constitute a valid and perfected first Lien
on the Property that is subject to such Mortgage and
Supplement to Assignment of Lease and all of the Lessor's
right, title and interest in and to the Improvements located
thereon, subject only to Permitted Exceptions.
(e) Flood Hazards. 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 XI
of the Lease and in accordance with the National Flood
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Insurance Act of 1968, as amended.
SECTION 8.4. Representations of Facility Lender. Facility Lender
represents and warrants to each of the other parties hereto that:
(a) Corporate Status. It (i) is a duly organized and validly
existing corporation in good standing under the laws of the
state of its incorporation and has the corporate power and
authority to own its property and assets and to transact the
business in which it is engaged and (ii) has duly qualified
and is authorized to do business and is in good standing in
all jurisdictions where it is required to be so qualified and
where the failure to be so qualified could have a material
adverse effect on the property, operations or financial
condition of Facility Lender.
(b) Corporate Power and Authority. It has the corporate power and
authority to execute, deliver and carry out the terms and
provisions of the Operative Documents to which it is or will
be a party, has taken all necessary corporate action to
authorize the execution, delivery and performance of the
Operative Documents to which it is or will be a party, has
duly executed and, assuming the due authorization, execution
and delivery hereof and thereof by the other parties hereto
and thereto, delivered each Operative Document required to be
executed and delivered by it and each such Operative Document
constitutes a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as such
enforceability may be limited or denied by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws effecting creditors' rights and the enforcement of
debtors' obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
(c) No Violation. Neither the execution, delivery and performance
by it of the Operative Documents to which it is or will be a
party nor compliance with the terms and provisions thereof,
nor the consummation of the transactions contemplated therein
(i) will contravene any Applicable Law, or (iii) will violate
any provision of its certificate of incorporation or by-laws.
(d) No Other Activities. It does not hold any assets, conduct any
business nor is it party to any Contractual Obligation except
as expressly contemplated by the Operative Documents.
(e) Indenture of Trust. Each of the representations and warranties
of the Facility Lender set forth in the Indenture of Trust are
true and correct in all material respects and the Facility
Lender is in compliance with its obligations under the
Operative Documents.
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(f) No Litigation. There is no action, suit or proceeding pending,
or to the knowledge of the Facility Lender, threatened,
against or affecting the Facility Lender, before any court or
arbitrator or any Governmental Authority which would
reasonably be expected to have or cause a Material Adverse
Effect.
SECTION 8.5. Representations and Warranties of the Indenture Trustee.
The Indenture Trustee hereby represents and warrants to each of the other
Participants that:
(a) Corporate Existence and Power. It is, respectively, a banking
association or corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization and has all corporate powers and all material
governmental licenses, authorizations and approvals required
to perform its obligations hereunder.
(b) Binding Effect. This Participation Agreement and each other
Operative Document to which the Indenture Trustee is a party
constitutes a valid and binding agreement of it enforceable
against it in accordance with its terms, provided that the
enforceability hereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar
laws affecting the enforcement of creditors' rights generally.
SECTION 9.
PAYMENT OF CERTAIN EXPENSES
Guarantor and Lessee agree, jointly and severally, for the benefit of
the Lessor, the Facility Lender, the Indenture Trustee and the Noteholders, to:
SECTION 9.1. Transaction Expenses. On the Closing Date (if statements
are received in satisfactory form within a reasonable time prior to such date
and in any event within thirty (30) days after receipt thereof), pay, or cause
to be paid, all reasonable fees, expenses and disbursements of the respective
counsel (including local counsel) for each of the Lessor, the Facility Lender
and the Indenture Trustee in connection with the transactions contemplated by
the Operative Documents and incurred in connection with the Closing Date
(subject to any negotiated fee arrangements which shall survive the execution
and delivery of this Agreement), including all other Transaction Expenses (in
connection with the Closing Date) and all other expenses in connection with the
Closing Date, including, without limitation, all expenses relating to
Environmental Audits, Appraisals, title insurance, surveys and all fees, taxes
and expenses for the recording, registration and filing of documents.
SECTION 9.2. Brokers' Fees and Stamp Taxes. Pay, or cause to be paid,
any brokers'
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fees and any and all stamp, transfer and other similar taxes, fees and excises,
if any, including any interest and penalties, which are payable in connection
with the transactions contemplated by this Participation Agreement and the other
Operative Documents.
SECTION 9.3. Certain Fees and Expenses. Pay or cause to be paid (i)
any and all Transaction Expenses of the Facility Lender (or any successor to the
Facility Lender), the Lessor and the Indenture Trustee (subject to any
negotiated fee arrangements which shall survive the execution and delivery of
this Agreement), (ii) all Transaction Expenses incurred by the Facility Lender,
the Indenture Trustee or the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Documents, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto, which have been requested by Lessee or
Guarantor, (iii) all Transaction Expenses incurred by Lessor, the Indenture
Trustee or the Facility Lender in connection with a transfer made pursuant to
Section 12.2 of this Participation Agreement or any substitution of a Property
pursuant to Section 7.4, and (iv) all Transaction Expenses incurred by the
Lessor, the Facility Lender or the Indenture Trustee in connection with any
purchase or substitution of any Property by the Lessee or other Person pursuant
to Articles XVI, XVII, XX or XXII of the Lease.
SECTION 10.
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. Covenants of Guarantor and Lessee. Guarantor and Lessee
hereby agree that so long as this Participation Agreement is in effect:
(a) Information. To the extent not already provided, the Guarantor
will deliver to the Lessor, S&P and ▇▇▇▇▇'▇.
(i) as soon as available and in any event within ninety
(90) days after the end of each Fiscal Year, a
consolidated balance sheet of the Guarantor and its
Subsidiaries as of the end of such Fiscal Year and
the related consolidated statements of income,
stockholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all
certified by KPMG Peat Marwick, LLP or other
independent public accountants of nationally
recognized standing;
(ii) as soon as available and in any event within
forty-five (45) days after the end of each of the
first three (3) Fiscal Quarters of each Fiscal Year,
a consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of the end of such
Fiscal Quarter and the related statement of income
and statement of cash flows for such Fiscal Quarter
and for the
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portion of the Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding
Fiscal Quarter (Fiscal Year only in the case of
balance sheets) and the corresponding portion of the
previous Fiscal Year;
(iii) promptly upon the mailing thereof to the stockholders
of the Guarantor generally, copies of all financial
statements, reports and proxy statements so mailed;
and
(iv) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits
thereto and any registration statements on Form S-8
or its equivalent) and annual, quarterly, monthly or
other periodic reports (including reports on Form
8-K) which the Guarantor shall have filed with the
Securities and Exchange Commission.
(v) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (i)
and (ii) above, a certificate, substantially in the
form of Exhibit H (a "Compliance Certificate"), of
the chief financial officer or the chief accounting
officer of the Guarantor stating whether any Event of
Default exists on the date of such certificate and,
if any Event of Default then exists, setting forth
the details thereof and the action which the
Guarantor or Lessee is taking or proposes to take
with respect thereto;
(vi) within five (5) Business Days after any of the chief
executive, chief financial, chief operating, chief
legal or chief accounting officer of the Guarantor or
Lessee becomes aware of the occurrence of any Event
of Default, a certificate of the chief financial
officer or the chief accounting officer of the
Guarantor or Lessee setting forth the details thereof
and the action which the Guarantor or Lessee is
taking or proposes to take with respect thereto;
(vii) from time to time such additional information
regarding the financial position or business of the
Guarantor or any of its Subsidiaries or any of the
Properties, as the Facility Lender, the Lessor, the
Indenture Trustee (at the request of a Noteholder) or
a Rating Agency may reasonably request, including
without limitation, information regarding the
Property Balance and the related amount of the Loan
and Lessor Investment Amounts allocated to each
Property.
(b) Inspection of Property, Books and Records. The Guarantor will
(i) keep, and cause each domestic Subsidiary to keep, proper
books of record and account in which full, true and correct
entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its business and activities;
and (ii) permit, and cause each
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Subsidiary to permit, representatives of the Facility Lender,
the Lessor, the Indenture Trustee (acting at the request of a
Noteholder) or a Rating Agency, at such person's expense prior
to the occurrence of a Default and at the Guarantor's expense
after the occurrence of a Default, to visit and inspect any of
their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their
respective officers, employees and independent public
accountants. The Guarantor and the Lessee agree to cooperate
and assist in such visits and inspections, in each case at
such reasonable times and as often as may reasonably be
requested.
(c) Payment of Obligations. The Guarantor and the Lessee each
covenants and agrees for the benefit of each Participant and
the Noteholders that it will duly and punctually pay its
respective obligations under the Operative Documents in
accordance with the terms thereof.
(d) Corporate Existence. Subject to Section 10.1(g) below, the
Guarantor will do, or cause to be done, all things necessary
to preserve and keep in full force and effect its corporate
existence and the corporate existence of the Lessee.
(e) Limitations on Liens. (i) The Guarantor will not, and will not
permit any Subsidiary to, issue, assume or guarantee any
notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed (herein referred to as
"indebtedness") secured by any mortgage, security interest,
pledge or lien (herein referred to as "mortgage") of or upon
any Principal Property, or upon shares of capital stock or
evidences of indebtedness for borrowed money issued by any
Subsidiary that owns Principal Property and owned by the
Guarantor or any Subsidiary, whether owned at the date of this
Agreement or thereafter acquired, without making effective
provision, and the Guarantor in each case will make or cause
to be made effective provision, whereby the obligations of the
Guarantor pursuant to the Guaranty shall be secured equally
and ratably with (or at the option of the Guarantor, prior to)
any and all other indebtedness thereby secured, so long as
such indebtedness shall be so secured; provided, however, that
this subsection (e) shall not apply to indebtedness secured by
any of the following:
(1) mortgages for taxes or other governmental charges either
not yet delinquent or the nonpayment of which is being contested in
good faith by appropriate proceedings, provided enforcement of any lien
has been stayed; mortgages comprising landlord's liens or liens of
carriers, warehousemen, mechanics or materialmen incurred in the
ordinary course of business for sums not yet due and payable or which
are being contested in good faith by appropriate proceedings; and any
other mortgages incurred or created in the ordinary course of business
not arising in connection with indebtedness that do not in the
aggregate materially
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impair the use or value of the properties or assets of the Guarantor
and its Subsidiaries, taken as a whole;
(2) mortgages existing on the date hereof;
(3) mortgages on any property existing at the time of
acquisition thereof;
(4) mortgages on property of a corporation existing at the
time such corporation is merged into or consolidated with the Guarantor
or a Subsidiary or at the time of a sale, lease or other disposition of
the properties of such corporation (or a division thereof) as an
entirety or substantially as an entirety to the Guarantor or a
Subsidiary, provided that such mortgage as a result of such merger,
consolidation, sale, lease or other disposition is not extended to
property owned by the Guarantor or such Subsidiary immediately prior
thereto;
(5) mortgages on property of a corporation, shares of capital
stock or debt of any corporation existing at the time such corporation
becomes a Subsidiary;
(6) mortgages securing indebtedness of a Subsidiary to the
Guarantor or to another Subsidiary;
(7) mortgages on property to secure all or part of the cost of
acquiring, substantially repairing or altering, constructing,
developing or substantially improving such property, or to secure
indebtedness incurred to provide funds for any such purpose or for
reimbursement of funds previously expended for any such purpose,
provided the commitment of the creditor to extend the credit secured by
any such mortgage shall have been obtained not later than twelve months
after the later of (a) the completion of the acquisition, substantial
repair or alteration, construction, development or substantial
improvement of such property or (b) the placing in operation of such
property or of such property as so substantially repaired or altered,
constructed, developed or substantially improved;
(8) mortgages securing indebtedness payable on demand or not
more than one year after the date as of which the determination is made
(excluding any indebtedness renewable or extendable at the option of
the debtor for a period or periods ending more than one year after the
date as of which such determination is made), which indebtedness in
accordance with generally accepted accounting practices would be
included among current liabilities;
(9) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
mortgage referred to in the foregoing clauses (1) to (8) inclusive;
provided, however, that the principal amount
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of indebtedness secured thereby and not otherwise authorized by said
clauses (1) to (8) inclusive shall not exceed the principal amount of
indebtedness, plus any premium or fee payable in connection with any
such extension, renewal or replacement, so secured at the time of such
extension, renewal or replacement;
(10) mortgages in favor of the United States of America or any
State thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any State
thereof, to secure partial progress, advance or other payments pursuant
to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the
cost of constructing or improving the property subject to such
mortgages;
(11) mortgages arising out of any final judgment for the
payment of money aggregating not in excess of $10,000,000 or mortgages
created by or relating to any legal proceeding or final judgment which
at the time is being contested in good faith by appropriate
proceedings, provided enforcement of any lien has been stayed; or
(12) easements or similar encumbrances, the existence of which
do not materially impair the use of the property subject thereto for
the purposes for which it is held or was acquired.
(ii) Notwithstanding the provisions of subsection (e)(i), the Guarantor
or any Subsidiary may issue, assume or guarantee indebtedness secured by
mortgages which would otherwise be subject to the restrictions of subsection
(e)(i) in an aggregate amount which, together with all Attributable Debt
outstanding pursuant to subsection (f)(ii) and all indebtedness outstanding
pursuant to this subsection (e), does not at the time exceed 15% of Consolidated
Capitalization.
(f) Limitations on Sale and Lease-Back Transactions. (i) The
Guarantor will not, nor will it permit any Subsidiary to,
enter into any Sale and Lease-Back Transaction with respect to
any Principal Property (except for a transaction providing for
a lease for a term, including any renewal thereof, of not more
than three years and except for a transaction between the
Guarantor and a Subsidiary or between Subsidiaries), unless
either (x) the Guarantor or such Subsidiary would be entitled
pursuant to subsection (e)(i) to issue, assume or guarantee
indebtedness secured by a mortgage on such Principal Property
in an amount at least equal to the Attributable Debt in
respect of such Sale and Lease-Back Transaction without being
required by subsection (e)(i) to equally and ratably secure
the obligations of the Guarantor pursuant to the Guaranty or
(y) the Guarantor shall apply or cause to be applied, in the
case of a sale or transfer for cash, an amount equal to the
net proceeds thereof (but not in excess of the net book value
of such Principal Property at the date of such sale or
transfer) and, in the case of a sale or transfer otherwise
than for cash, an amount equal to the fair value (as
determined by the Board of Directors) of the Principal
Property so leased to the retirement, within 180 days after
the effective
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date of such Sale and Lease-Back Transaction, of Senior Funded
Indebtedness of the Guarantor or a Subsidiary; provided,
however, that the amount to be applied to such retirement of
Senior Funded Indebtedness shall be reduced by an amount equal
to the principal amount, plus any premium or fee paid in
connection with any redemption in accordance with the terms,
of Senior Funded Indebtedness voluntarily retired by the
Guarantor within 180 days after the effective date of such
Sale and Lease-Back Transaction, excluding retirements
pursuant to mandatory sinking fund or prepayment provisions
and payments at maturity.
(ii) Notwithstanding the provisions of subsection (f)(i), the
Guarantor or any Subsidiary may enter into a Sale and Lease-Back Transaction
which would otherwise be subject to the restrictions of subsection (f)(i) so as
to create an aggregate amount of Attributable Debt which, together with all
indebtedness outstanding pursuant to subsection (e)(ii) and all Attributable
Debt outstanding pursuant to this subsection (f)(ii), does not exceed 15% of
Consolidated Capitalization.
(g) Consolidations, Mergers, Conveyance or Transfer. Neither the
Guarantor nor Lessee shall consolidate with or merge into any
other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(1) the Person formed by such consolidation or into
which the Guarantor or the Lessee is merged or the Person
which acquires by conveyance or transfer the properties and
assets of the Guarantor or the Lessee, as applicable,
substantially as an entirety shall be a Person organized and
existing under the laws of the United States of America or any
State or the District of Columbia, and shall expressly assume,
by an assumption agreement executed and delivered to the
Lessor, the Facility Lender and the Indenture Trustee, all
obligations of the Guarantor or the Lessee, as applicable,
pursuant to the Operative Documents and the performance or
observance of every covenant of this Agreement on the part of
the Guarantor or the Lessee, as applicable, to be performed or
observed;
(2) immediately after giving effect to such
transaction, no Event of Default, and no event which, after
notice or lapse of time, or both, would become an Event of
Default, shall have happened and be continuing; and
(3) the Guarantor or the Lessee, as applicable, has
delivered to the Lessor, the Facility Lender and the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel
each stating that such consolidation, merger, conveyance or
transfer and, if an assumption agreement is required in
connection with such transaction, such assumption agreement
comply with this Section 10.1(g) and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
Upon any consolidation or merger, or any conveyance or transfer of the
properties and
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assets of the Guarantor or the Lessee, as applicable, substantially as
an entirety in accordance with this subsection, the successor Person
formed by such consolidation or into which the Guarantor or the Lessee,
as applicable, is merged or to which such conveyance or transfer is
made shall succeed to, and be substituted for, and may exercise every
right and power of, the Guarantor or the Lessee, as applicable, under
the Operative Documents with the same effect as if such successor
corporation had been named as the Guarantor or the Lessee, as
applicable, herein and thereafter the predecessor corporation shall be
released from all obligations and covenants under this Agreement and
the other Operative Documents. In the event of any such conveyance or
transfer, the Guarantor or the Lessee, as applicable, as the
predecessor corporation may be dissolved, wound up and liquidated at
any time thereafter.
(h) Actions Under Indenture of Trust. The Guarantor shall fulfill
all obligations of the Facility Lender pursuant to Sections
9.01 and 9.02 of the Indenture of Trust.
SECTION 10.2. Cooperation with the Lessee. The Lessor, the Facility
Lender and the Indenture Trustee shall, to the extent reasonably requested by
Lessee (but without assuming additional liabilities on account thereof), at
Lessee's expense, cooperate with Lessee in connection with its covenants
contained herein including, without limitation, at any time and from time to
time, upon the request of Lessee, to promptly and duly execute and deliver any
and all such further instruments, documents and financing statements and
continuation statements related thereto) as Lessee may reasonably request in
order to perform such covenants. Each of the Lessor, the Facility Lender and the
Indenture Trustee agrees that, to the extent it shall obtain actual knowledge of
the occurrence of an Event of Default, a Loan Agreement Event of Default or an
Indenture Event of Default under the Operative Documents, it shall promptly
notify Lessee describing the same in reasonable detail.
SECTION 10.3. Release of Properties. If the Lessee shall at any time
purchase any Property pursuant to the terms of the Lease, or if all of the
Properties shall be sold in accordance with, and the Lessee otherwise satisfies
each of the obligations and conditions set forth in the Lease for the release or
substitution of a Property therefrom, then, upon application of the proceeds of
any such sale pursuant to Section 5 (except in the case of a substitution) and
all accrued interest and any other payments due and owing from Lessee to the
Indenture Trustee, the Noteholders, the Facility Lender or Lessor on such date,
including without limitation pursuant to Section 13 of this Agreement, such
Property shall be released from the Liens created by the Security Documents and
the Indenture Trustee, Lessor and the Facility Lender shall, at the expense of
the Lessee, execute and deliver such instruments as are legally required in
order to effectuate such release. In addition, upon the payment in full of all
other amounts owing by the Lessee hereunder or under any other Operative
Document, the Properties shall be released from the Liens created by the
Security Documents. Upon request of the Lessee or Lessor following any such
release, the Indenture Trustee and Facility Lender shall, at the sole cost and
expense of the Lessee or Lessor execute and deliver to the Lessor or the Lessee
such documents as the Lessee or Lessor shall reasonably request
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to evidence such release.
SECTION 10.4. Discharge of Liens. (a) Each of the Facility Lender and
the Lessor hereby severally agrees that it will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be discharged, all Lessor
Liens on the Properties (and its rights under the Operative Documents)
attributable to it; provided, however, that such Participants shall not be
required to so discharge any such Lessor Lien prior to any sale of the
Properties while the same is being contested in good faith by appropriate
proceedings.
(b) The Indenture Trustee hereby severally agrees that it will not
create or permit to exist at any time, and will, at its own cost
and expense, promptly take such action as may be necessary duly to
discharge, or to cause to be discharged, all Trustee's Liens on
the Properties attributable to it; provided, however, that the
Indenture Trustee shall not be required to so discharge any such
Trustee's Lien prior to any sale of the Properties while the same
is being contested in good faith by appropriate proceedings.
SECTION 10.5. Notice of Credit Rating. The Lessor agrees that it shall
immediately notify the Guarantor and the Lessee in writing in the event that its
general partner's long or short term debt rating is downgraded, withdrawn, or
qualified by any Rating Agency or if Lessor (or its general partner) is placed
on credit watch with negative implications by any Rating Agency.
SECTION 10.6. Covenants of the Facility Lender and the Lessor. Each of
the Facility Lender and the Lessor hereby agrees, severally and not jointly,
that so long as this Participation Agreement is in effect:
(a) Maintenance of Existence. It shall maintain its corporate or
partnership existence and qualification as a foreign
corporation or foreign limited partnership in each state in
which a Property is located and in which the failure to
maintain such existence or qualification would have a
materially adverse effect on its ability to perform its
obligations under the Operative Documents as contemplated on
the Closing Date.
(b) Certificate of Incorporation. Facility Lender shall not allow
an amendment to its certificates of incorporation or other
governing documents without the consent of the Lessee,
Indenture Trustee and Lessor.
(c) Prepayment. Other than as provided in Section 5, the Facility
Lender will not prepay, redeem or refinance any of the Fixed
Rate Notes. Except as permitted by the Operative Documents,
the Lessor shall not prepay the Loan in whole or in part;
provided, however, that subject to Section 5, Lessor may
prepay or cause to be prepaid all or any portion of the Note
at any time following an Event of Default where the
Participants are exercising remedies.
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(d) Indebtedness; Other Business. The Facility Lender shall not
contract for, create, incur or assume any Indebtedness, or
enter into any business or other activity, other than pursuant
to, under or as contemplated by the Operative Documents.
(e) Change of Chief Place of Business. Each of the Lessor and the
Facility Lender, with respect to itself only, shall give
prompt notice to Lessee and the Indenture Trustee if the
Lessor's or the Facility Lender's chief place of business or
chief executive office, or the office where the records
concerning the accounts or contract rights relating to a
Property are kept, shall cease to be located at the address
set forth in Section 14.3 or if it shall change its name,
identity or corporate structure.
(f) Subordination of Liens. During the Term, the Liens created by
the Security Documents related to each Property shall be
expressly made subject and subordinate to the Lease related to
such Property.
(g) No Voluntary Bankruptcy. Neither the Lessor (unless the Lessee
shall give its prior written consent) nor the Facility Lender
shall (A) commence any case, proceeding or other action under
any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
arrangement, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seek
appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial benefit of its
creditors; and neither the Lessor nor the Facility Lender
shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts
set forth in this paragraph.
(h) No Sale of Properties. Neither the Lessor nor the Facility
Lender shall transfer any of their respective interests in the
Properties except as provided in the Operative Documents.
(i) No Powers of Attorney. The Facility Lender shall not grant any
powers of attorney to any Person for any purposes except (i)
for the purpose of permitting any Person to perform any
ministerial or administrative functions on behalf of the
Facility Lender which are not inconsistent with the terms of
the Operative Documents, (ii) to the Indenture Trustee for the
purposes of the Security Documents, or (iii) where provided
for or permitted by the Operative Documents.
(j) Same Business. Unless the Lessee otherwise consents in
writing, Lessor shall stay engaged in substantially the same
business (including engaging in the business of leasing
personal and real property as lessor, or acting as agent,
broker or advisor in leasing such property and making,
acquiring or servicing loans or other investments or
extensions of credit in connection therewith or incidental
thereto) as conducted
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on the Closing Date.
SECTION 10.7. No Bankruptcy Proceedings. The Guarantor, Lessee and each
Participant hereby agrees that it will not institute against, or join any other
Person in instituting against, the Facility Lender or the Lessor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any Federal or state bankruptcy or similar law, for one year
and a day after the Fixed Rate Notes are paid. Nothing in this Section 10.7
shall preclude, or be deemed to estop, the Guarantor, Lessee or any Participant
(i) from taking or omitting to take any action prior to such date in (A) any
case or proceeding voluntarily filed or commenced by or on behalf of the
Facility Lender under or pursuant to any such law or (B) any involuntary case or
proceeding pertaining to the Facility Lender which is filed or commenced by or
on behalf of a Person other than the Guarantor, Lessee or any Participant under
or pursuant to any such law, or (ii) from commencing or prosecuting any legal
action which is not an involuntary case or proceeding under or pursuant to any
such law against the Participant or any of its properties or otherwise
exercising its remedies under the Operative Documents.
SECTION 10.8. Notice of Claims Against Lessor. Lessor shall promptly
notify the Lessee and the Guarantor in writing in the event that Lessor defaults
in any obligation or any Claim is asserted against Lessor (including any
Environmental Claim) which, exceeds $5,000,000 in any one instance or
$10,000,000 in the aggregate (other than defaults or Claims arising in
connection with the Operative Documents and the transactions contemplated
thereby). Upon receipt of such notice the Lessee may either:
(i) Replace the Lessor pursuant to Section 12.2; or
(ii) Require that the Lessor promptly execute, deliver and
record mortgages in form satisfactory to Lessee granting to Lessee a
Lien on the Properties to secure the performance of all obligations of
Lessor pursuant to the Lease and the other Operative Documents, which
Lien shall be second in priority to the Mortgages. Each of the
Participants hereby acknowledges and agrees that any such Liens granted
to the Lessee hereunder shall constitute "Permitted Liens" pursuant to
clause (i) of such definition.
SECTION 11.
LESSEE DIRECTIONS
SECTION 11.1. Lessee Directions. The Lessor, the Guarantor, the
Indenture Trustee and the Facility Lender agree that, so long as no Default or
Event of Default exists:
(a) Lessee shall have the right to give all notices pursuant to
the Indenture of Trust with respect to the redemption,
defeasance, prepayment or other matters relating to the
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Fixed Rate Notes and to direct the Facility Lender and Lessor
to take all actions necessary to accomplish such directions;
provided, however, that any such directions shall not conflict
with any provision of any of the Operative Documents;
(b) [INTENTIONALLY OMITTED];
(c) Lessee shall have the right to approve any successor
"Indenture Trustee" to the extent permitted pursuant to
Section 8.11 of the Indenture of Trust;
(d) without limiting the foregoing clauses (a) through (c) and in
addition thereto, Lessee shall have the right to exercise any
other right of the Lessor under the Loan Documents and the
Facility Lender under the Indenture of Trust upon not less
than three (3) Business Days' prior written notice from Lessee
to the Lessor, Indenture Trustee, and the Facility Lender,
unless such party objects to such exercise within three (3)
Business Days of receipt of such notice; and
(e) Lessee shall have the right to give notices pursuant to
Appendix 3 of this Participation Agreement.
SECTION 12.
TRANSFER OF INTEREST
SECTION 12.1. Restrictions on and Effect of Transfer. Except for the
transactions contemplated hereby, no Participant shall assign, convey or
otherwise transfer (including pursuant to a participation) all or any portion of
its right, title or interest in, to or under any of the Operative Documents,
except (x) with respect to the Noteholders, as provided in Article 2.08 of the
Indenture of Trust, and (y) with respect to the Facility Lender and the Lessor,
with the prior written consent of the Indenture Trustee and Lessee, which
consent, in the case of the Indenture Trustee, shall not be unreasonably
withheld, and (z) with respect to the Lessor, with the prior written consent of
the Lessee and only if the Lessor shall have provided written confirmation from
each of ▇▇▇▇▇'▇ and S&P that immediately after giving effect to such transfer
the Fixed Rate Notes shall not be rated lower than the Fixed Rate Notes are
rated immediately prior to such transfer and such transfer shall not result in a
downgrade, withdrawal or qualification of the ratings assigned to the Fixed Rate
Notes by ▇▇▇▇▇'▇ and S&P; provided that, in the event that an Event of Default
has occurred and is continuing pursuant to which the Participants have begun to
exercise remedies against the Lessee or Guarantor, the consent of the Lessee
shall not be required for any such transfer by the Lessor. Any transfer made
pursuant to the Operative Documents shall be subject to the Security Documents
and any transferee or assignee shall expressly agree in writing to be bound by
the terms of this Participation Agreement.
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SECTION 12.2. Replacement of Lessor or Facility Lender. (A) If the
Lessor or Facility Lender (i) defaults in any of its material obligations
pursuant to the Operative Documents or, with respect to Facility Lender, any
Indenture Event of Default shall occur, or with respect to Lessor, any Loan
Agreement Event of Default shall occur (which in either case, does not arise out
of, or is not attributable to, an Event of Default), or (ii) in the case of the
Lessor, (x) the Lessor or its general partner suffer a downgrade, qualification
or withdrawal or, in the reasonable judgment of the Lessee, potential downgrade,
qualification or withdrawal, of its long or short term credit rating by any
Rating Agency or (y) Credit Suisse First Boston ceases to be the sole general
partner of Lessor, the Lessee shall be permitted to replace the Lessor at any
time, or (B) if the Lessor or its general partner suffers a downgrade,
withdrawal or qualification of its credit rating to the extent that such
downgrade, withdrawal or qualification results or would result in the credit
rating assigned to the Fixed Rate Notes by either of the Rating Agencies being
lower than the credit rating then assigned by the Rating Agencies to the
Guarantor, the Lessee shall be required to replace the Lessor; provided that in
any instance described in clause (a) or (b) above (i) such replacement does not
conflict with any Requirement of Law, (ii) any replacement Lessor shall
purchase, at par, the Lessor Investment Amount, all accrued and unpaid
Certificate Earnings thereon and other amounts owing to Lessor under the
Operative Documents on or prior to the date of replacement, (iii) the
replacement Lessor or Facility Lender shall be reasonably satisfactory to the
Indenture Trustee, (iv) the Guarantor and Lessee shall be obligated to pay any
Transaction Expenses arising in connection therewith, (v) the replacement Lessor
or Facility Lender shall agree in writing to be subject to all of the terms and
conditions of the Operative Documents and this Participation Agreement and (vi)
as a condition precedent to such replacement, the Guarantor or Lessee shall have
provided written confirmation from each of ▇▇▇▇▇'▇ and S&P that immediately
after having given effect to such replacement, the Fixed Rate Notes shall not be
rated lower than the Fixed Rate Notes are rated immediately prior to such
replacement and such replacement shall not result in a downgrade, withdrawal or
qualification of the rating assigned to the Fixed Rate Notes by ▇▇▇▇▇'▇ or S&P.
The Lessor and the Facility Lender agree to cooperate with the Lessee in its
efforts to arrange replacements as contemplated by this Section 12.2.
SECTION 13.
INDEMNIFICATION
SECTION 13.1. General Indemnification. The Guarantor and Lessee,
jointly and severally, whether or not any of the transactions contemplated
hereby shall be consummated, hereby assume liability for, and indemnify,
protect, defend, save and keep harmless each Indemnitee, on an After Tax Basis,
from and against any and all Claims that may be imposed on, incurred by or
asserted against such Indemnitee in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or
waiver in respect thereof; or
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(b) the Properties or any part thereof or interest therein;
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection,
ownership, management, possession, operation, rental, lease,
sublease, repossession (whether by summary proceedings or
otherwise), maintenance, repair, alteration, modification,
addition, substitution, storage, transfer of title,
redelivery, use, financing, refinancing, disposition,
operation, condition, sale (including, without limitation, any
sale pursuant to the Lease), return or other disposition of
all or any part of any interest in the Properties or the
imposition of any Lien (or incurring of any liability to
refund or pay over any amount as a result of any Lien)
thereon, including, without limitation: (l) personal injury,
death or property damage, including Claims or penalties
arising from any violation of law or in tort (strict liability
or otherwise), (2) latent or other defects, whether or not
discoverable, (3) any Claim based upon a violation or alleged
violation of the terms of any Applicable Law or any
restriction, easement, condition or covenant or other matter
affecting title to the Properties or any part thereof, (4) the
making of any Modifications in violation of any Insurance
Requirements, (5) any Claim for patent, trademark or copyright
infringement, and (6) Claims arising from any public
improvements with respect to the Properties resulting in any
change or special assessments being levied against the
Properties or any Claim for utility "tap-in" fees;
(d) the offer, issuance, sale or delivery of the Fixed Rate Notes
or the Note;
(e) the breach or alleged breach by the Guarantor or the Lessee of
any representation or warranty made by it or deemed made by it
in any Operative Document or any certificate required to be
delivered by any Operative Document or the breach or alleged
breach by the Guarantor or the Lessee of any covenant or
obligation made by it in any Operative Document;
(f) the retaining or employment of any broker, finder or financial
advisor by the Guarantor or Lessee to act on its behalf in
connection with the Operative Documents, or the authorization
of any broker or financial adviser retained or employed by the
Guarantor or the Lessee so to act, or the incurring of any
fees or commissions by the Lessee or the Guarantor to which
the Indemnitees might be subjected by virtue of their entering
into the transactions contemplated by the Operative Documents;
(g) the existence of any Lien on or with respect to the
Properties, any Basic Rent or Supplemental Rent, title
thereto, or any interest therein, including any Liens which
arise out of the possession, use, occupancy, construction,
repair or rebuilding of any
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of the Properties or by reason of labor or materials furnished
or claimed to have been furnished to the Lessee, or any of its
contractors or agents or by reason of the financing of any
personalty or equipment purchased or leased by the Lessee or
Modifications constructed by the Lessee, except in all cases
Permitted Liens;
(h) any breach of any requirement, condition, restriction or
limitation in any other Operative Document on the part of
Lessee or Guarantor to be performed; or
(i) any easement, license, right-of-way, covenant, restriction or
other document or agreement entered into by Lessor at the
request of Lessee;
provided, however, neither the Guarantor nor the Lessee shall be required to
indemnify any Indemnitee under this Section 13.1 for any of the following: (1)
any Claim to the extent that such Claim resulted from the willful misconduct or
gross negligence of such Indemnitee, (2) any Claim to the extent resulting from
Lessor Liens which the Indemnitee is responsible for discharging under the
Operative Documents, (3) any Claim to the extent directly resulting from a
breach of an Operative Document or Applicable Law by such Indemnitee (except for
a breach by the Facility Lender that is arising out of or attributable to a
breach by the Lessee or Guarantor of any of its obligations under any of the
Operative Documents), and (4) any Claim related to the Properties to the extent
attributable to acts or events occurring after the Lease Termination Date unless
an Event of Default has occurred and is continuing and the Participants are
exercising remedies against the Lessee or the Properties in respect of the
Operative Documents (in which event all of the foregoing provisions of this
Section 13.1 shall remain in full force and effect). It is expressly understood
and agreed that the indemnity provided for herein shall survive the expiration
or termination of the Lease and the other Operative Documents and the payment by
Lessee and Guarantor of all amounts due thereunder for a period of three (3)
years (but shall continue in full force and effect following such date with
respect to any Claim asserted prior to such date), and shall be separate and
independent from any remedy under the Lease or any other Operative Document;
provided that, to the extent that any Claim arises after such three (3) year
period which was not asserted during such three (3) year period due to a failure
to discover such Claim or for any other reason, the indemnity provided for in
this Section 13.1 shall be revived upon the assertion of such Claim solely with
respect to such Claim.
SECTION 13.2. Environmental Indemnity. In addition to, and not in
derogation of, the indemnities contained in Section 13.1 and 13.4 the Guarantor
and the Lessee, jointly and severally, hereby indemnify, hold harmless and
defend each Indemnitee from and against any and all Claims, including, but not
limited to, all costs incurred in connection with any investigation or
monitoring of site conditions or any clean-up, remediation, removal or
restoration work by or at the direction of any Governmental Authority, related
to the Properties or the Lessee's use of the Properties, arising directly or
indirectly, in whole or in part, out of
(i) the presence on or under any Property of any
Hazardous Substances, or
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any releases or discharges of any Hazardous Substances on,
under, from or onto any Property or any other Hazardous
Condition with respect to any Property,
(ii) any Hazardous Activity, including, without
limitation, construction, carried on or undertaken on or off
any Property, and whether by the Lessee, or any predecessor in
title or any employees, Indenture Trustee, contractors or
subcontractors of the Lessee, or any predecessor in title, or
any other Persons, in connection with the handling, treatment,
removal, storage, decontamination, clean-up, transport or
disposal of any Hazardous Substances that at any time are
located or present on or under any Property or that at any
time migrate, flow, percolate, diffuse or in any way move onto
or under any Property,
(iii) loss of or damage to any property or the
environment (including, without limitation, clean-up costs,
response costs, remediation and removal costs, cost of
corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to
any Person, and all expenses associated with the protection of
wildlife, aquatic species, vegetation, flora and fauna, and
any mitigative action required by or under Environmental Laws,
(iv) any Claim concerning lack of compliance with
Environmental Laws with respect to the Properties, or any act
or omission causing an environmental condition with respect to
the Properties that requires remediation or would allow any
governmental agency to record a lien or encumbrance on the
land records with respect to the Properties,
(v) any residual contamination on or under any
Property, including any such contamination affecting any
natural resources, and to any such contamination of any
property or natural resources arising in connection with the
generation, use, handling, storage, transport or disposal of
any Hazardous Substances associated with such Property and
related to the residual contamination, the obligation
existing, irrespective of whether any of such activities were
or will be undertaken in accordance with applicable laws,
regulations, codes and ordinances,
(vi) in any case with respect to the matters
described in the foregoing clauses (i) through (v) that arise
or occur
(w) during the Term,
(x) at any time during which the Lessee or
any Affiliate thereof owns any interest in or
otherwise occupies, controls or possesses the
relevant Property or any portion thereof, or
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(y) during any period after and during the
continuance of any Event of Default, or
(vii) a breach of the representations and warranties
of the Guarantor and the Lessee provided herein;
provided, however, that neither the Guarantor nor the Lessee shall be required
to indemnify any Indemnitee under this Section 13.2 for any of the following:
(1) any Claim to the extent that such Claim resulted from the willful misconduct
or gross negligence of such Indemnitee, (2) any Claim to the extent proximately
caused by any action on the part of such Indemnitee or, to the extent such Claim
relates to or is attributable to, events occurring after the Term where such
Indemnitee is in control of the Property or Properties, inaction on the part of
such Indemnitee, and (3) any Claim related to the Properties to the extent
attributable to acts or events occurring before or after the Term unless, in the
case of Claims attributable to acts or events occurring after the Lease
Termination Date, an Event of Default has occurred and is continuing and the
Participants are exercising remedies against the Lessee or the Properties under
the Operative Documents (in which event all of the foregoing provisions of this
Section 13.2 shall remain in full force and effect), or the Claim arises out of
a breach of the representations and warranties of the Guarantor or Lessee
contained herein. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of the Lease and
the other Operative Documents and the payment by Lessee and Guarantor of all
amounts due thereunder for a period of three (3) years (but shall continue in
full force and effect following such date with respect to any Claim asserted
prior to such date) and shall be separate and independent from any remedy under
the Lease or any other Operative Document; provided that, to the extent that any
Claim arises after such three (3) year period which was not asserted during such
three (3) period due to a failure to discover such Claim or for any other
reason, the indemnity provided for in this Section 13.2 shall be revived upon
the assertion of such Claim solely with respect to such Claim.
SECTION 13.3. Proceedings in Respect of Claims. With respect to any
amount that the Guarantor or the Lessee is requested by an Indemnitee to pay by
reason of Section 13.1 or 13.2, such Indemnitee shall, if so requested by the
Guarantor or the Lessee and prior to any payment, submit such additional
information to the Guarantor or the Lessee as the Guarantor or the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment. In case any action, suit or
proceeding shall be brought against any Indemnitee, such Indemnitee shall notify
the Guarantor or the Lessee of the commencement thereof, and the Guarantor or
the Lessee shall be entitled, at its expense, to participate in, and, to the
extent that the Guarantor or the Lessee desires to, assume and control the
defense thereof; provided, however, that the Guarantor or the Lessee shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee in
respect of such action, suit or proceeding and the Guarantor or the Lessee shall
keep such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with respect
to such action suit or proceeding as such Indemnitee shall reasonably request,
and, provided further, that the Guarantor or the Lessee shall not be entitled to
assume and control the defense of any such action, suit or proceeding if and to
the extent that, (A) in the reasonable opinion of such Indemnitee, (x) such
action, suit or proceeding involves any possibility of imposition of criminal
liability or any material risk of material civil liability on such Indemnitee or
will involve a material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on the Properties or any part thereof
unless the
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Guarantor or the Lessee shall have posted a bond or other security satisfactory
to the relevant Indemnitees in respect to such risk or (y) the control of such
action, suit or proceeding would involve an actual or potential conflict of
interest (in which case each Indemnitee may retain separate counsel at the
expense of Lessee and Guarantor), (B) such proceeding involves Claims not fully
indemnified by the Guarantor or the Lessee which the Guarantor or the Lessee and
the Indemnitee have been unable to sever from the indemnified claim(s), or (C)
an Event of Default has occurred and is continuing. The Indemnitee may
participate in a reasonable manner at its own expense and with its own counsel
in any proceeding conducted by the Guarantor or the Lessee in accordance with
the foregoing. Neither the Guarantor nor the Lessee shall enter into any
settlement or other compromise with respect to any Claim which is entitled to be
indemnified under Section 13.1 or 13.2 without the prior written consent of the
related Indemnitee, which consent shall not be unreasonably withheld.
No Indemnitee shall enter into any settlement or other compromise with
respect to any Claim which is entitled to be indemnified under Section 13.1 or
13.2 without the prior written consent of the Lessee, which consent shall not be
unreasonably withheld, unless such Indemnitee waives its right to be indemnified
under Section 13.1 or 13.2 with respect to such Claim.
Upon payment in full of any Claim by the Guarantor or the Lessee
pursuant to Section 14.1 or 13.2 to or on behalf of an Indemnitee, the Guarantor
or the Lessee, as the case may be, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto
(other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense) to the extent of such payment, and such
Indemnitee shall execute such instruments of assignment and conveyance, evidence
of claims and payment and such other documents, instruments and agreements as
may be reasonably necessary to preserve any such claims and otherwise cooperate
with the Guarantor and the Lessee and give such further assurances as are
reasonably necessary or advisable to enable the Guarantor or the Lessee
vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.2
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable.
SECTION 13.4. End of Term Indemnity. In addition to the indemnities
provided in Sections 13.1 and 13.2, if the Lessee elects the Remarketing Option
set forth at Section 22.1 of the Lease with respect to the Properties subject to
the Lease and there is a Shortfall Amount with
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respect to such Properties, then prior to the Lease Termination Date and as a
condition to Lessee's right to complete the remarketing of such Property
pursuant to Section 22.1 of the Lease, Lessee shall cause to be delivered to
Lessor no later than the Lease Termination Date, at Lessee's sole cost and
expense, a report from an Appraiser in form and substance reasonably
satisfactory to the Indenture Trustee and the Lessor (the "End of the Term
Report") to establish the reason for any impairment to the value of any of such
Property which was sold for an amount less than the Property Balance for such
Property or not sold. On the Lease Termination Date, the Lessee shall pay to
Lessor an amount equal to the Shortfall Amount that the End of the Term Report
demonstrates was the result of an impairment to the value in such Property due
to:
(a) extraordinary use, failure to maintain, to repair, to restore,
to rebuild or to replace, failure to comply with all
Requirements of Law, failure to use quality workmanship,
method of installation or removal or maintenance, repair,
rebuilding or replacement, (excepting in each case ordinary
wear and tear), or
(b) the existence of any Hazardous Activity, Hazardous Substance
or Environmental Violations occurring or discovered after the
Closing Date for such Property (regardless of the Person so
discovering any of the foregoing), or
(c) any restoration or rebuilding carried out by the Lessee or any
failure to complete any Modification, restoration or
rebuilding, in either case, by the Lease Termination Date,
(d) any grant, release, dedication, transfer, annexation or
amendment made pursuant to Section 12.2 of the Lease or any
release of a portion of the Property made pursuant to Section
12.3 of the Lease; or
(e) the failure of the Lessor to have good and marketable title to
such Property free and clear of all Liens (including Permitted
Liens (other than Lessor Liens and Trustee's Liens)) and
exceptions to title.
SECTION 13.5. General Tax Indemnity. (a) Indemnification.
Guarantor and Lessee, jointly and severally, shall pay and assume liability for,
and do hereby agree to indemnify, protect and defend each Property and all Tax
Indemnitees, and hold them harmless against, all Impositions on an After Tax
Basis.
(b) Contests. If any claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Imposition as to which
the Lessee may have an indemnity obligation pursuant to Section 13.5(a), or if
any Tax Indemnitee shall determine that any Imposition as to which the Lessee
may have an indemnity obligation pursuant to Section 13.5(a) may be payable,
such Tax Indemnitee shall promptly notify Lessee in writing and shall not take
any action with respect to
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such claim, proceeding or Imposition without the written consent of Lessee (such
consent not to be unreasonably withheld or unreasonably delayed) for thirty (30)
days after the receipt of such notice by Lessee; provided, however, that in the
case of any such claim or proceeding, if such Tax Indemnitee shall be required
by law or regulation to take action prior to the end of such thirty (30) day
period, such Tax Indemnitee shall in such notice to Lessee, so inform Lessee,
and such Tax Indemnitee shall not take any action with respect to such claim,
proceeding or Imposition without the consent of Lessee (such consent not to be
unreasonably withheld or unreasonably delayed) for ten (10) days after the
receipt of such notice by Lessee unless the Tax Indemnitee shall be required by
law or regulation to take action prior to the end of such ten (10)-day period.
Lessee shall be entitled for a period of thirty (30) days from receipt
of such notice from the Tax Indemnitee (or such shorter period as the Tax
Indemnitee has notified Lessee is required by law or regulation for the Tax
Indemnitee to commence such contest) to request in writing that such Tax
Indemnitee contest the imposition of such Tax, at Guarantor's and Lessee's joint
and several expense and the Tax Indemnitee shall, at the joint and several
expense of Guarantor and Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals) related to the validity,
applicability or amount of such Impositions (provided, however, that (A) if such
contest involves a tax other than a tax on net income and can be pursued
independently from any other proceeding involving a tax liability of such Tax
Indemnitee, the Tax Indemnitee, at Lessee's request, shall allow Guarantor or
Lessee to conduct and control such contest and (B) in the case of any contest,
the Tax Indemnitee may request Guarantor or Lessee to conduct and control such
contest) by, in the sole discretion of the Person conducting and controlling
such contest, (l) resisting payment thereof, (2) not paying the same except
under protest, if protest is necessary and proper, (3) if the payment be made,
using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings, or (4) taking such other action as is
reasonably requested by Guarantor or Lessee from time to time.
The party controlling any contest shall consult in good faith with the
non-controlling party and shall keep the noncontrolling party reasonably
informed as to the conduct of such contest; provided that, all decisions
ultimately shall be made in the sole discretion of the controlling party. The
parties agree that a Tax Indemnitee may at any time decline to take further
action with respect to the contest of any Imposition and may settle such contest
if such Tax Indemnitee shall waive its rights to any indemnity from Lessee that
otherwise would be payable in respect of such claim (and any future claim by any
taxing authority, the contest of which is precluded by reason of such resolution
of such claim) and shall pay to Lessee any amount previously paid or advanced by
Lessee pursuant to this Section 13.5 by way of indemnification or advance for
the payment of an Imposition other than expenses of such contest.
Notwithstanding the foregoing provisions of this Section 13.5, a Tax
Indemnitee shall not be required to take any action and neither Guarantor nor
Lessee shall be permitted to contest any Impositions in its own name or that of
the Tax Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to
such Tax Indemnitee on demand and on an After Tax Basis all reasonable
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49
costs, losses and expenses that such Tax Indemnitee actually incurs in
connection with contesting such Impositions, including, without limitation, all
reasonable legal, accounting and investigatory fees and disbursements, (B) Tax
Indemnitee shall have reasonably determined that the action to be taken will not
result in any material danger of sale, forfeiture or loss of any Property, or
any part thereof or interest therein, will not interfere with the payment of
Rent, and will not result in risk of criminal liability, (C) if such contest
shall involve the payment of the Imposition prior to the contest, Lessee shall
provide to the Tax Indemnitee an interest-free advance in an amount equal to the
Imposition that the Tax Indemnitee is required to pay (with no additional net
after-tax cost to such Tax Indemnitee), (D) in the case of a claim that must be
pursued in the name of a Tax Indemnitee (or an Affiliate thereof), Lessee shall
have provided to such Tax Indemnitee an opinion of independent tax counsel
selected by the Lessee and reasonably satisfactory to Tax Indemnitee stating
that a reasonable basis exists to contest such claim (or, in the case of an
appeal of an adverse determination, an opinion of such counsel to the effect
that the position asserted in such appeal will more likely than not prevail) and
(E) no Event of Default hereunder shall have occurred and be continuing.
Each Tax Indemnitee shall at Lessee's expense supply Lessee with such
information and documents reasonably requested by Lessee as are in such Tax
Indemnitee's possession and as are necessary or advisable for Lessee to
participate in any action, suit or proceeding to the extent permitted by this
Section 13.5(b); provided that, such Tax Indemnitee shall not be required to
disclose its tax return to Lessee to the extent that the information deemed
necessary or desirable by Lessee contained therein is otherwise made available
to the Lessee in a form which will not hinder Lessee's contest of such action,
suit or proceeding.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest a claim with respect to the
imposition of any Tax if such Tax Indemnitee shall waive its right to
indemnification under this Section 13.5 with respect to such claim and any
related claim with respect to other taxable years the contest of which is
precluded or otherwise materially adversely affected as a result of such waiver.
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee
shall obtain a credit or refund of any Taxes paid by Lessee pursuant to this
Section 13.5 or (y) by reason of the incurrence or imposition of any Tax for
which a Tax Indemnitee is indemnified hereunder or any payment made to or for
the account of such Tax Indemnitee by Lessee pursuant to this Section 13.5 or
any payment made by a Tax Indemnitee to Lessee by reason of this Section
13.5(c), such Tax Indemnitee at any time actually realizes a reduction in any
Taxes for which Lessee is not required to indemnify such Tax Indemnitee pursuant
to this Section 13.5 which reduction in Taxes was not taken into account in
computing such payment by Lessee to or for the account of such Tax Indemnitee or
by the Tax Indemnitee to Lessee, then such Tax Indemnitee shall promptly pay to
Lessee on an After Tax Basis (xx) the amount of such credit or refund, together
with the amount of any interest received by such Tax Indemnitee on account of
such credit or refund or (yy) an amount equal to such reduction in Taxes, as the
case may be; provided that no such payment shall be made
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so long as an Event of Default shall have occurred and be continuing but shall
be paid promptly after cure of such Event of Default. Each Tax Indemnitee agrees
to take such actions as Lessee may reasonably request (provided in the good
faith judgment of the Tax Indemnitee, such actions would not result in any
adverse effect on the Tax Indemnitee for which the Tax Indemnitee is not
entitled to indemnification from Lessee) and to otherwise act in good faith to
claim such refunds and other available Tax benefits, and take such other actions
as may be reasonable to minimize any payment due from Lessee pursuant to this
Section 13.5. The disallowance or reduction of any credit, refund or other tax
savings with respect to which a Tax Indemnitee has made a payment to Lessee
under this Section 13.5(c) shall be treated as a Tax for which Lessee is
obligated to indemnify such Tax Indemnitee hereunder without regard to the
exclusions set forth in the definition of Impositions.
(d) Payments. Any Imposition indemnifiable under this Section
13.5 shall be paid directly when due to the applicable taxing authority if
direct payment is practicable and permitted. If direct payment to the applicable
taxing authority is not permitted or is otherwise not made, any amount payable
to a Tax Indemnitee pursuant to this Section 13.5 shall be paid within thirty
(30) days after receipt of a written demand therefor from such Tax Indemnitee
accompanied by a written statement describing in reasonable detail the amount so
payable, but not before two (2) Business Days prior to the date that the
relevant Taxes are due. Any payments made pursuant to Section 13.5 shall be made
in immediately available funds at such bank or to such account as specified by
the payee in written directions to the payor, or, if no such direction shall
have been given, by check of the payor payable to the order of the payee by
certified mail, postage prepaid at its address as set forth in this
Participation Agreement. Upon the request of any Tax Indemnitee with respect to
a Tax that Lessee is required to pay, Lessee shall furnish to such Tax
Indemnitee the original or a certified copy of a receipt for Lessee's payment of
such Tax or such other evidence of payment as is reasonably acceptable to such
Tax Indemnitee.
(e) Reports. In the case of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 13.5, Lessee shall promptly notify the Tax
Indemnitee of such requirement and, at Lessee's expense (i) if Lessee is
permitted (unless otherwise requested by the Tax Indemnitee) by Applicable Law,
timely file such report, return or statement in its own name or (ii) if such
report, return or statement is required to be in the name of or filed by such
Tax Indemnitee or the Tax Indemnitee otherwise requests that such report, return
or statement be prepared for filing by such Tax Indemnitee, prepare such report,
return or statement in such manner as shall be satisfactory to such Tax
Indemnitee and send the same to the Tax Indemnitee for filing no later than
fifteen (15) days prior to the due date therefor. In any case in which the Tax
Indemnitee will file any such report, return or statement, Lessee shall, upon
written request of such Tax Indemnitee, provide such Tax Indemnitee with such
information as is reasonably necessary to allow the Tax Indemnitee to file such
report, return or statement.
(f) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee or any payment by a Tax Indemnitee to Lessee
pursuant to this Section 13.5 shall be verified
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and certified by an independent public accounting firm mutually acceptable to
Lessee and the Tax Indemnitee. The costs of such verification shall be borne by
Lessee unless such verification shall result in an adjustment in Lessee's favor
of ten percent (10%) of the payment as computed by the Tax Indemnitee, in which
case such fee shall be paid by the Tax Indemnitee. In no event shall Lessee have
the right to review the Tax Indemnitee's tax returns or receive any other
confidential information from the Tax Indemnitee in connection with such
verification. Any information provided to such accountants by any Person shall
be and remain the exclusive property of such Person and shall be deemed by the
parties to be (and the accountants will confirm in writing that they will treat
such information as) the private, proprietary and confidential property of such
Person, and no Person other than such Person and the accountants shall be
entitled thereto and all such materials shall be returned to such Person. Such
accounting firm shall be requested to make its determination within thirty (30)
days of Lessee's request for verifications and the computations of the
accounting firm shall be final, binding and conclusive upon Lessee and the Tax
Indemnitee. The parties agree that the sole responsibility of the independent
public accounting firm shall be to verify the amount of a payment pursuant to
this Participation Agreement and that matters of interpretation of this
Participation Agreement are not within the scope of the independent accounting
firm's responsibilities.
SECTION 14.
MISCELLANEOUS
SECTION 14.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
transfer of any Property to the Lessor, any disposition of any interest of the
Lessor in any Property or any Improvements, the payment of the Note and any
disposition thereof shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Documents. Except as expressly provided herein, it is expressly understood and
agreed that each of the indemnities provided for herein shall survive the
expiration or termination of the Lease and the other Operative Documents and the
payment by Lessee and Guarantor of all amounts due thereunder for a period of
three (3) years (but shall continue in full force and effect following such date
with respect to any Claim asserted prior to such date) and shall be separate and
independent from any remedy under the Lease or any other Operative Document;
provided that, to the extent that any Claim arises after such three (3) year
period which was not asserted during such three (3) period due to a failure to
discover such Claim or for any other reason, such indemnity shall be revived
upon the assertion of such Claim solely with respect to such Claim.
SECTION 14.2. No Broker; etc. Each of the parties hereto represents to
the others
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that it has not retained or employed any broker, finder or financial adviser,
other than Credit Suisse First Boston Corporation and Invemed Associates, Inc.,
to act on its behalf in connection with this Participation Agreement or the
transactions contemplated herein, nor has it authorized any broker, finder or
financial adviser retained or employed by any other Person so to act. Any party
who is in breach of this representation shall indemnify and hold the other
parties harmless from and against any liability arising out of such breach of
this representation.
SECTION 14.3. Notices. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States mail, by nationally recognized
courier service, by hand or by facsimile communication and any such notice shall
become effective five (5) Business Days after being deposited in the mails,
certified or registered with appropriate postage prepaid or one (1) Business Day
after delivery to a nationally recognized courier service specifying overnight
delivery or, if delivered by hand, when received, or, if sent by facsimile
communication, when confirmed by electronic or other means during business hours
on a Business Day (or, if confirmed after business hours or on a non-Business
Day, on the next Business Day) and shall be directed to the address of such
Person as indicated:
If to Guarantor, to it at:
The Home Depot, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇.▇. ▇▇▇▇▇
Senior Vice President/Legal
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee, to it at:
Home Depot U.S.A., Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇.▇. ▇▇▇▇▇
Senior Vice President/Legal
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lessor, to it at:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10010
Attn: Director
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Indenture Trustee, to it at:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Trust Administration
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Facility Lender, to it at:
HD Real Estate Funding Corp. II
c/o JH Management Corporation
Room 520
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Moody's, to it at:
▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to S&P, to it at:
Standard & Poors
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
From time to time any party may designate a new address for purposes of
notice hereunder by notice to each of the other parties hereto. The Lessee shall
receive a copy of each notice delivered pursuant to the Operative Documents and
Lessee hereby agrees to notify promptly Moody's and S&P of any termination of
the Lease.
SECTION 14.4. Counterparts. This Participation Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same agreement.
SECTION 14.5. Amendments. No Operative Document nor any of the terms
thereof may be terminated, amended, supplemented, waived or modified with
respect to Guarantor, Lessee, the Lessor, the Facility Lender or the Indenture
Trustee, except (a) in the case of a termination, amendment, supplement, waiver
or modification to be binding on Guarantor, Lessee, the Lessor, the Facility
Lender or the Indenture Trustee, with the written agreement or consent of such
party, and (b) in the case of a termination, amendment, supplement, waiver or
modification to the Indenture of Trust, in accordance with the terms thereof;
provided, however, that
(1) no such termination, amendment, supplement, waiver or
modification shall without written agreement or consent of each Participant
(other than Facility Lender):
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(x)(i) modify any of the provisions of this Section 14.5; (ii)
reduce, modify, amend or waive any fees or indemnities in favor of any
Participant, including without limitation amounts payable pursuant to
Section 13 (except that any Person (other than the Facility Lender) may
consent to any reduction, modification, amendment or waiver of any
indemnity payable to it); (iii) modify, postpone, reduce or forgive, in
whole or in part, any payment of Rent (other than pursuant to the terms
of any Operative Document), any Loan or Lessor Investment Amount, the
Lease Balance, Residual Value Guaranty, amounts due pursuant to Section
22.2 of the Lease, interest or Certificate Earnings or, subject to
clause (ii) above, any other amount payable under any Lease or this
Participation Agreement, or modify the definition or method of
calculation of Rent (other than pursuant to the terms of any Operative
Document), any Loan or Lessor Investment Amount, Lease Balance,
Shortfall Amount, Residual Value Guaranty, Maximum Property Costs, or
any other definition which would affect the amounts to be advanced or
which are payable under the Operative Documents or any of the other
matters set forth above; or
(y) consent to any assignment of the Lease or the Guaranty,
releasing Lessee from its obligations in respect of the payments of
Rent and the Lease Balance or changing the absolute and unconditional
character of such obligation or releasing the Guarantor from its
obligations in respect of the payments under the Guaranty or changing
the absolute and unconditional character of such obligation;
(2) no other termination, amendment, supplement, waiver or
modification shall, without the written agreement or consent of the Lessor and
the Indenture Trustee, be made to Sections 5 or 7 of this Participation
Agreement or the definition of "Lease Event of Default".
Notwithstanding the foregoing, any termination, amendment, supplement, waiver or
modification to any provision of any of the Operative Documents (other than an
amendment, supplement, waiver or modification made to cure any ambiguity, to
correct or supplement any provision in such Operative Document which may be
defective or inconsistent with any other provision in such Operative Document or
any related Operative Document shall not be effective unless, as a condition
precedent thereto, each of Moody's and S&P shall have provided written
confirmation that immediately after giving effect to such modification,
supplement, amendment, waiver or termination, the Fixed Rate Notes shall not be
rated lower than such Fixed Rate Notes are rated immediately prior to giving
effect thereto and such supplement, amendment, modification, waiver or
termination shall not result in a downgrade, withdrawal or qualification of the
rating assigned to the Fixed Rate Notes by Moody's and S&P.
SECTION 14.6. Usury. It is the intent of the parties hereto not to
violate any federal or state law, rule or regulation pertaining either to usury
or to the contracting for or charging or collecting of interest, and each of the
parties hereto agree that, should any provision of this Participation Agreement
or of any of the Operative Documents, or any act performed hereunder or
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56
thereunder, violate any such law, rule or regulation, then the excess of
interest contracted for or charged or collected over the maximum lawful rate of
interest shall be applied to the outstanding principal indebtedness due to the
Participants under the applicable Operative Document.
SECTION 14.7. Confidentiality. Each Participant agrees to exercise
commercially reasonable efforts to keep any information delivered or made
available by the Guarantor or Lessee to it which is clearly indicated or stated
to be confidential information (or when the circumstances under which such
information is delivered or when the content thereof would cause a reasonable
person to believe that such information is confidential), confidential from
anyone other than persons employed or retained by such Participant who are or
are expected to become engaged in evaluating, approving, structuring or
administering any of the Operative Documents (such Persons to likewise be under
similar obligations of confidentiality with respect to such information);
provided, however that nothing herein shall prevent any Participant from
disclosing such information (i) to any other Participant, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Participant, (iv)
which has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which any Participant or its Affiliates may be
a party, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Operative Document, (vii) to such
Participant's legal counsel, independent auditors and to such Participant's
Affiliates, (viii) to any actual or proposed Participant, assignee or other
transferee of all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this Section 14.7, and (ix) to the Rating
Agencies; provided, that, should disclosure of any such confidential information
be required by virtue of clause (ii) or (v) of the immediately preceding
provisos, any relevant Participant shall notify Lessee and Guarantor of the same
so as to allow the Lessee or Guarantor, at Lessee's or Guarantor's sole cost and
expense, to seek a protective order or to take any other appropriate action;
provided, further, that, no Participant shall be required to delay compliance
with any directive to disclose beyond the last date such delay is legally
permissible any such information so as to allow the Lessee or Guarantor to
effect any such action.
SECTION 14.8. Headings; etc. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
SECTION 14.9. Parties in Interest. Except as expressly provided
herein, none of the provisions of this Participation Agreement are intended for
the benefit of any Person except the parties hereto.
SECTION 14.10. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE (INCLUDING SECTIONS 5-1401 AND 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW
AND
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57
CONFLICTS OF LAW RULES).
SECTION 14.11. Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 14.12. Further Assurances. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole, joint and
several expense of Guarantor and Lessee, all such further acts, conveyances,
documents and assurances as the other parties may from time to time reasonably
request in order to carry out and effectuate the intent and purposes of this
Participation Agreement, the other Operative Documents, and the transactions
contemplated hereby and thereby (including, without limitation, the preparation,
execution and filing of any and all Uniform Commercial Code financing statements
and other filings or registrations which the parties hereto may from time to
time request to be filed or effected). Lessee will, at its own expense and
without need of any prior request from any other party, take such action as may
be necessary (including any action specified in the preceding sentence), or (if
the Lessor or Indenture Trustee shall so request) as so requested, in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Document.
SECTION 14.13. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE
OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14.14. Limitations on Recourse Against Lessor. Notwithstanding
anything contained in this Participation Agreement or any other Operative
Documents to the contrary, each of the parties hereto agrees to look solely to
Lessor's (or to any partner thereof's) estate and interest in the Properties and
the Improvements thereon and rights under the Operative Documents for the
collection of any judgment requiring the payment of money by Lessor in the event
of liability by Lessor, and no other property or assets of Lessor or any
shareholder, owner or partner (direct or indirect) in or of Lessor, or any
director, officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of any party hereto against Lessor under or with
respect to the Operative Documents, the relationship of Lessor and any other
party hereto hereunder or any other liability of Lessor to any other party
hereto under the Operative Documents; provided that, nothing herein shall limit
recourse against the Lessor or its partners for the gross negligence or willful
misconduct of such Persons or claims proximately caused by Lessor's breach of
its obligations pursuant to Sections 9.1, 10.2 (solely with respect to the first
sentence thereof), 10.3, 10.4, 10.6(a), (g), (h) or 10.7 of this Participation
Agreement; provided further, that the foregoing proviso is intended to allow a
claim
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58
for damages against Lessor but shall not be construed as creating a full
recourse obligation on the part of Lessor (or any partner thereof) to repay the
Loan in whole or in part or any amounts relating to the Loan arising under the
Loan Agreement and the Note.
SECTION 14.15. Limitation on Recourse Against Facility Lender. The
provisions of Section 2.14 of the Indenture of Trust are hereby incorporated
herein by this reference and made a part hereof and of each of the Operative
Documents and each party hereto agrees to be bound by the limitations set forth
therein.
[SIGNATURE PAGES BEGIN ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
THE HOME DEPOT, INC., as Guarantor
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President - Legal
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
[CORPORATE SEAL]
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HOME DEPOT U.S.A., INC., as Lessee
By: /s/ ▇▇▇▇▇ ▇. Tome
------------------------------------------
Name: ▇▇▇▇▇ ▇. Tome
Title: Vice President and Treasurer
Attest: /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Secretary
[CORPORATE SEAL]
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HD REAL ESTATE FUNDING CORPORATION II, as
Facility Lender
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Treasurer
CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership, as Lessor
BY: CREDIT SUISSE FIRST BOSTON,
its general partner
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
Title: Associate
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
57
62
THE BANK OF NEW YORK, as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
CREDIT SUISSE FIRST BOSTON
CORPORATION, as Initial Purchaser
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
INVEMED ASSOCIATES, INC.,
as Initial Purchaser
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
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