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EXHIBIT 10.41
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PARTICIPATION AGREEMENT
Among
BORDERS GROUP, INC.,
BORDERS, INC.,
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly stated herein,
but solely as Owner Trustee,
▇▇▇▇▇ PROJECT FUNDING CORP.,
as Owner Beneficiary,
FIRST SECURITY BANK, N.A.,
as Collateral Trustee,
And
THE PURCHASERS IDENTIFIED HEREIN
Dated as of January 22, 2001
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Participation Agreement
ARTICLE I TERMS OF ISSUANCE OF THE NOTES...............................................1
Section 1.1 Issuance and Sale of Notes...................................................1
Section 1.2 Closing......................................................................1
Section 1.3 Wire Transfer................................................................2
Section 1.4 Failure to Deliver...........................................................2
ARTICLE II CONDITIONS TO THE CLOSING....................................................2
Section 2.1 Representations and Warranties...............................................2
Section 2.2 Performance; No Default......................................................3
Section 2.3 Indenture....................................................................3
Section 2.4 Notes........................................................................3
Section 2.5 Collateral Assignments of Project Loan Documentation.........................3
Section 2.6 Assignments of Mortgage, et al...............................................3
Section 2.7 Certification of Cost........................................................3
Section 2.8 Surveys, Appraisals, Environmental Reports and Zoning........................4
Section 2.9 Mortgagee's Title Insurance; Endorsements....................................4
Section 2.10 Estoppels....................................................................4
Section 2.12 Compliance Certificate.......................................................4
Section 2.13 Opinions of Counsel..........................................................5
Section 2.14 Purchase Permitted By Applicable Law, etc....................................6
Section 2.15 Payment of Special Counsel and other Fees....................................6
Section 2.16 Payment of Recording Fees, Charges and Taxes.................................6
Section 2.17 Private Placement Number.....................................................6
Section 2.18 Offeree Letter...............................................................6
Section 2.19 Proceedings and Documents....................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES...............................................7
Section 3.1 Representations of the Issuer................................................7
Section 3.2 Representations of the Collateral Trustee....................................7
Section 3.3 Representations of the Guarantor.............................................7
Section 3.4 Representations of the Tenant................................................7
Section 3.5 Representations of the Owner Beneficiary.....................................7
Section 3.6 Representations of the Purchasers............................................7
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Participation Agreement
ARTICLE IV GUARANTOR COVENANTS..........................................................9
Section 4.1 Reporting Requirements.......................................................9
Section 4.2 Inspection Rights...........................................................10
Section 4.3 Transaction Expenses........................................................11
Section 4.4 Payment of Certain Fees and Expenses........................................11
ARTICLE V DIRECT PAYMENT..............................................................11
Section 5.1 Direct Payment..............................................................11
ARTICLE VI DEFINITIONS.................................................................12
Section 6.1 General Definitions.........................................................12
Section 6.2 Indenture Definitions.......................................................17
ARTICLE VII OTHER COVENANTS AND AGREEMENTS..............................................17
Section 7.1 Covenants of the Trust Company, the Issuer, the Collateral
Trustee and the Owner Beneficiary.............................................................17
Section 7.2 Guarantor's Operative Document Rights.......................................18
Section 7.3 Covenants of the Collateral Trustee.........................................18
Section 7.4 Collateral Trustee Project Loan Agreement Rights............................19
ARTICLE VIII TRANSFER OF INTEREST........................................................19
Section 8.1 Restrictions of Transfer....................................................19
Section 8.2 Effect of Transfer..........................................................19
ARTICLE IX INDEMNIFICATION.............................................................20
Section 9.1 General Indemnity...........................................................20
Section 9.2 General Tax Indemnity.......................................................21
ARTICLE X MISCELLANEOUS...............................................................24
Section 10.1 Amendments, Etc.............................................................24
Section 10.2 Notices, Etc................................................................24
Section 10.3 No Waiver; Remedies.........................................................26
Section 10.4 Binding Effect; Term; Assignability.........................................26
Section 10.5 Governing Law...............................................................26
Section 10.6 Execution in Counterparts...................................................26
Section 10.7 Third Party Beneficiaries...................................................26
Section 10.8 Survival of Covenants and Representations...................................26
Section 10.9 Severability................................................................26
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Section 10.10 Confidential Information....................................................27
Section 10.11 Issuer Recourse.............................................................28
Section 10.12 Owner Beneficiary Exculpation...............................................28
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Participation Agreement
ATTACHMENTS TO PARTICIPATION AGREEMENT
SCHEDULE I -- Name and Address of Purchasers [SCHEDULE I HAS BEEN REDACTED]
EXHIBIT A -- Description of Closing Opinion of Special Counsel for Purchasers
EXHIBIT B -- Description of Closing Opinion of Counsel for Issuer
EXHIBIT C -- Description of Closing Opinion of Counsel for Collateral Trustee
EXHIBIT D -- Description of Closing Opinion of Counsel for Guarantor and Tenant
EXHIBIT E-1 -- Description of Closing Opinion of Counsel for Project Borrowers
EXHIBIT E-2 -- Description of Closing Opinion of Special Counsel for Project Borrowers
EXHIBIT F -- Representations and Warranties of Issuer
EXHIBIT G -- Representations and Warranties of Collateral Trustee
EXHIBIT H-1 -- Representations and Warranties of Guarantor
EXHIBIT H-2 -- Representations and Warranties of Tenant
EXHIBIT I -- Representations and Warranties of Owner Beneficiary
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Participation Agreement
PARTICIPATION AGREEMENT
INTRODUCTORY
THIS PARTICIPATION AGREEMENT (the "Participation Agreement") is dated
as of January 22, 2001, and is among Borders Group, Inc., a Michigan corporation
(the "Guarantor"), Borders, Inc., a Colorado corporation (the "Tenant"), ▇▇▇▇▇
Project Funding Corp., a Delaware corporation, as owner beneficiary under the
Trust Agreement (as hereinafter defined) (the "Owner Beneficiary"), Wilmington
Trust Company, not in its individual capacity except as expressly stated herein
(in such individual capacity, referred to herein as the "Trust Company"), but
solely as owner trustee under the Trust Agreement (in such capacity as owner
trustee, the "Issuer"), First Security Bank, N.A., as Collateral Trustee under
the Collateral Trust Indenture dated as of January 22, 2001 (the "Indenture")
between the Issuer and the Collateral Trustee (the "Collateral Trustee") and the
Purchasers listed on Schedule I hereto (the "Purchasers").
WHEREAS, Issuer wishes to issue its 8.69% Senior Secured Notes due 2016
(the "Notes") in accordance with the terms of the Indenture (as hereinafter
defined), which Notes shall have the tenor, and shall be secured in the manner,
set forth in the Indenture.
WHEREAS, subject to the terms and conditions set forth herein and on
the basis of the representations and warranties hereinafter set forth, the
Purchasers are willing to purchase from the Issuer all of the Notes.
WHEREAS, capitalized terms used in this Participation Agreement shall
have the respective meanings as specified in Article VI hereof.
NOW, THEREFORE, in consideration of and for the mutual benefit of the
parties hereto, each of the undersigned does hereby agree as follows:
ARTICLE I
TERMS OF ISSUANCE OF THE NOTES
Section 1.1 Issuance and Sale of Notes. The Issuer hereby agrees to
sell to the Purchasers, and each of the Purchasers agrees, severally and not
jointly, to purchase from the Issuer, the Notes on the Closing Date at a price
of 100% of the principal amount thereof and in the aggregate principal amount
set forth opposite its name on Schedule I hereto (the "Purchase Price"). The
Issuer hereby directs the Collateral Trustee to execute the certificate of
authentication appended to each Note.
Section 1.2 Closing. The closing of the transaction contemplated by the
Indenture and this Participation Agreement, including, without limitation, the
issuance and sale of the Notes, shall be held at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
PLLC, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at
11:00 a.m., Bloomfield Hills, Michigan time, on February 2, 2001 or at such
other date and time as may be mutually acceptable to the parties hereto (the
"Closing Date").
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Participation Agreement
Section 1.3 Wire Transfer. On the Closing Date, the Purchase Price for
each Note shall be paid by the Purchaser thereof directly to the Issuer by wire
transfer of immediately available funds for the account of the Issuer at
Comerica Bank, Detroit, Michigan, ABA #072 000 096, Account No. 1851004075, For
Credit of First American Title Insurance Company, Ref: Borders Trust 2001.
Section 1.4 Failure to Deliver. If on the Closing Date the Issuer fails
to tender to any Purchaser the Notes to be purchased by such Purchaser or if the
conditions to the obligation of such Purchaser specified in Article II have not
been fulfilled, such Purchaser may thereupon elect to be relieved of all further
obligations under this Participation Agreement. Nothing in this Section shall
operate to relieve the Issuer, the Owner Beneficiary, the Guarantor or the
Tenant from their respective obligations hereunder or to waive any of such
Purchaser's rights against the Issuer, the Owner Beneficiary, the Guarantor or
the Tenant.
In addition to execution and delivery of the Notes, the Issuer shall,
at the request of Purchaser, execute and deliver on the Closing Date such
receipts, endorsements, and other documents acknowledging receipt of the
Purchase Price as such Purchaser may reasonably request.
ARTICLE II
CONDITIONS TO THE CLOSING
The obligation of each Purchaser to purchase and pay for the Notes to
be sold to such Purchaser on the Closing Date is subject to the fulfillment to
its satisfaction, prior to or on the Closing Date, of the following conditions:
Section 2.1 Representations and Warranties.
(a) The representations and warranties of the Issuer contained in
Exhibit F to this Participation Agreement shall be true and correct on and with
respect to the Closing Date.
(b) The representations and warranties of the Collateral Trustee
contained in Exhibit G to this Participation Agreement shall be true and correct
on and with respect to the Closing Date.
(c) The representations and warranties of the Guarantor contained in
Exhibit H-1 to this Participation Agreement shall be true and correct on and
with respect to the Closing Date.
(d) The representations and warranties of the Tenant contained in
Exhibit H-2 to this Participation Agreement shall be true and correct on and
with respect to the Closing Date.
(e) The representations and warranties of the Owner Beneficiary
contained in Exhibit I to this Participation Agreement shall be true and correct
on and with respect to the Closing Date.
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Section 2.2 Performance; No Default.
(a) The Issuer and the Collateral Trustee shall have performed all of
their respective obligations and complied with all agreements and conditions
required to be performed and complied with on or prior to the Closing Date as
set forth in this Participation Agreement.
(b) No default or event of default shall have occurred and be
continuing with respect to any Project Loan Note, any Lease or any other Project
Loan Document and no event shall have occurred and be continuing under the
provisions of any such instrument or agreement which, with the lapse of time or
the giving of notice, or both, would constitute a default or an event of default
thereunder.
Section 2.3 Indenture. The Indenture shall have been duly executed and
delivered by the Issuer and the Collateral Trustee, and such parties shall have
performed, complied with or satisfied all agreements and conditions contained in
the Indenture required to be performed or complied with on or prior to the
Closing Date to the satisfaction of such Purchaser.
Section 2.4 Notes. The Issuer shall have issued, and the Collateral
Trustee shall have authenticated, the respective Note to such Purchaser and each
of the other Purchasers, and each of the other Purchasers shall have purchased
the Notes to be purchased by them at the Closing as specified in Schedule I
hereto.
Section 2.5 Collateral Assignments of Project Loan Documentation. The
Issuer shall have executed and delivered in favor of the Collateral Trustee a
Collateral Assignment of Project Loan Documentation for each Project Loan,
together with, (i) with respect to each Project Loan, the related executed
original Project Loan Note, together with executed originals of the related
Project Loan Agreement, Mortgage, Assignment of Lease and Rents and
Environmental Indemnity, and a duly completed UCC financing statement listing
the related Project Borrower, as debtor, and the Issuer, as secured party, and
listing as collateral all fixtures located on the respective Mortgaged Property,
to be filed in such filing offices as such Purchaser may reasonably determine,
(ii) with respect to each Project Loan, a duly completed UCC financing statement
listing the related Project Borrower, as debtor, the Issuer, as secured party,
and the Collateral Trustee, as assignee, relating to the UCC financing statement
referred to in clause (i) above to be filed in each filing office as such
Purchaser may reasonably determine and (iii) duly completed UCC financing
statement listing the Issuer, as debtor, and the Collateral Trustee, as secured
party, and listing as collateral the security interests created by each
Collateral Assignment of Project Loan Documentation to be filed in such filing
office(s) as such Purchaser shall reasonably determine.
Section 2.6 Assignments of Mortgage, et al. The Issuer shall have
executed and delivered in favor of the Collateral Trustee an Assignment of
Mortgage for each Mortgage and a Reassignment of Lease and Rents for each
Assignment of Lease and Rents, in recordable form for recording in the
appropriate filing office in which the respective Mortgaged Property is located.
Section 2.7 Certification of Cost. Certification of the actual cost for
each of the Mortgaged Properties certified by the Guarantor shall have been
delivered to such Purchaser or its special counsel and shall be satisfactory to
such Purchaser in scope and form.
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Participation Agreement
Section 2.8 Surveys, Appraisals, Environmental Reports and Zoning.
Surveys, real property appraisals and environmental reports for each of the
Mortgaged Properties shall have been delivered to such Purchaser or its special
counsel and shall be satisfactory to such Purchaser in scope and form. Such
Purchaser shall have received sufficient evidence necessary to determine that
all zoning laws, regulations and ordinances have been complied with for each
Mortgaged Property.
Section 2.9 Mortgagee's Title Insurance; Endorsements. Loan title
insurance policies issued by a title insurance company naming the Collateral
Trustee as the insured mortgagee reasonably satisfactory to such Purchaser (or,
in the alternative, a commitment to issue a loan title insurance policy issued
by a title insurance company reasonably satisfactory to such Purchaser and
marked and initialed by an authorized agent of such title company to show all
changes to be made in connection with the actual issuance of such title
insurance policy) and dated the date of the recording of the Mortgages shall
have been issued for each Mortgaged Property and shall be satisfactory in scope
and form to such Purchaser.
Section 2.10 Estoppels. The Tenant shall have executed and delivered
the Tenant Estoppel and shall deliver estoppel certificates in respect of each
reciprocal easement and/or operating agreement affecting any Mortgaged Property
in form and scope, and executed by such parties, as may be reasonably
satisfactory to each Purchaser.
Section 2.11 INTENTIONALLY OMITTED
Section 2.12 Compliance Certificate.
(a) Issuer Officer's Certificate. The Issuer shall have delivered to
the Purchasers an Officer's Certificate, dated the Closing Date, certifying that
the conditions specified in Sections 2.1(a), 2.2 and 2.3 (to the extent relating
to the obligations of the Issuer) have been fulfilled.
(b) Issuer Existence and Authority. On or prior to the Closing Date,
such Purchaser shall have received, in form and substance reasonably
satisfactory to such Purchaser and special counsel to the Purchasers, such
documents and evidence with respect to the Issuer as special counsel to the
Purchasers may reasonably request in order to establish the existence and good
standing of the Issuer and the authorization of the transactions contemplated by
this Participation Agreement and all other Operative Documents to which it is a
party.
(c) Collateral Trustee's Officer's Certificate. The Collateral Trustee
shall have delivered to the Purchasers an Officer's Certificate, dated the
Closing Date, certifying that the conditions specified in Sections 2.1(b),
2.2(a) and 2.3 (to the extent relating to the obligations of the Collateral
Trustee) have been fulfilled.
(d) Collateral Trustee's Existence and Authority. Such Purchaser shall
have received, in form and substance reasonably satisfactory to such Purchaser
and special counsel to the Purchasers, such documents and evidence with respect
to the Collateral Trustee as special counsel to the Purchasers may reasonably
request in order to establish the existence of the Collateral Trustee and the
authorization of the transactions contemplated by this Participation Agreement
and all other Operative Documents to which it is a party.
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(e) Guarantor's Officer's Certificate. The Guarantor shall have
delivered to the Purchasers an Officer's Certificate, dated the Closing Date,
certifying that, to such officer's knowledge, the representations and warranties
contained in Exhibit H-1 to this Participation Agreement are true and correct on
and with respect to the Closing Date.
(f) Guarantor's Existence and Authority. Such Purchaser shall have
received, in form and substance reasonably satisfactory to such Purchaser and
special counsel to the Purchasers, such documents and evidence with respect to
the Guarantor as special counsel to the Purchasers may reasonably request in
order to establish the existence and good standing of the Guarantor and the
authorization of the transactions contemplated by this Participation Agreement
and all other Operative Documents to which it is a party.
(g) Tenant's Officer's Certificate. The Tenant shall have delivered to
the Purchasers an Officer's Certificate, dated the Closing Date, certifying
that, to such officer's knowledge, the representations and warranties contained
in Exhibit H-2 to this Participation Agreement are true and correct on and with
respect to the Closing Date.
(h) Tenant's Existence and Authority. Such Purchaser shall have
received, in form and substance reasonably satisfactory to such Purchaser and
special counsel to the Purchasers, such documents and evidence with respect to
the Tenant as special counsel to the Purchasers may reasonably request in order
to establish the existence and good standing of the Tenant and the authorization
of the transactions contemplated by this Participation Agreement and all other
Operative Documents to which it is a party.
Section 2.13 Opinions of Counsel. Each Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser from:
(a) ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, special counsel for the Issuer, dated
the Closing Date and covering the matters set forth in Exhibit B and covering
such other matters incident to the transactions contemplated hereby as such
Purchaser may reasonably request (and the Issuer hereby instructs its counsel to
deliver such opinions to the Purchasers),
(b) Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Collateral Trustee, dated
the Closing Date and covering the matters set forth in Exhibit C and covering
such other matters incident to the transactions contemplated hereby as such
Purchaser may reasonably request (and the Collateral Trustee hereby instructs
its counsel to deliver such opinion to the Purchasers),
(c) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC, special counsel for the Guarantor and the
Tenant, dated the Closing Date and covering the matters set forth in Exhibit D
and covering such other matters incident to the transactions contemplated hereby
as such Purchaser may reasonably request,
(d) various local counsel and special local counsel for the Project
Borrowers dated on or prior to the Closing Date and covering the matters set
forth in Exhibit E-1 and Exhibit E-2 and covering such other matters incident to
the transactions contemplated hereby as such Purchaser may reasonably request,
and
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(e) ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, special counsel to the Purchasers in
connection with such transactions, dated the Closing Date and substantially in
the form set forth in Exhibit A and covering such other matters incident to such
transactions as the Purchasers may reasonably request.
Section 2.14 Purchase Permitted By Applicable Law, etc. On the Closing
Date, the purchase of the Notes by such Purchaser shall (a) be permitted by the
laws and regulations of each jurisdiction to which such Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not violate
any applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System) and (c) not
subject such Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof. If requested by any Purchaser, such Purchaser shall have received
an Officer's Certificate of the Issuer certifying as to such matters of fact as
it may reasonably specify to enable such Purchaser to determine whether such
purchase is so permitted.
Section 2.15 Payment of Special Counsel and other Fees. The Guarantor
shall have paid, on or before the Closing Date, the fees, charges and
disbursements of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, special counsel for the Purchasers.
Section 2.16 Payment of Recording Fees, Charges and Taxes. All title
insurance charges and premiums and all fees, charges and taxes in connection
with the recordation or filing and re-recordation or re-filing of the Project
Loan Documents and any other agreement or instrument, financing statement or any
publication of notice required to be filed or recorded to protect the validity
of the liens securing the obligations of the Project Loans shall have been paid
in full by the Guarantor.
Section 2.17 Private Placement Number. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
Section 2.18 Offeree Letter. An offeree letter shall have been issued
by McDonald Investments, Inc. to the Purchasers satisfactory to each Purchaser
in scope and form.
Section 2.19 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Participation Agreement and all documents and instruments incident to such
transactions shall be reasonably satisfactory to such Purchaser and its special
counsel, and such Purchaser and its special counsel shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser may reasonably request.
For purposes of this Article II, the payment of the Purchase Price by
such Purchaser for each Note to be purchased by it hereunder shall constitute
conclusive evidence that such Purchaser is satisfied that each and every
condition set forth in this Article II has been fulfilled or that such Purchaser
has waived compliance of any such condition; provided, however, that nothing
contained in this paragraph shall be construed as a waiver of the truth and
accuracy of any representation or warranty made by any party on or prior to the
Closing Date in connection with the transactions contemplated by the
Participation Agreement and the Indenture.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations of the Issuer. In order to induce each
Purchaser to purchase the Notes from the Issuer, the Issuer represents and
warrants that all representations and warranties set forth in Exhibit F to this
Participation Agreement are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
Section 3.2 Representations of the Collateral Trustee. In order to
induce each Purchaser to purchase Notes from the Issuer, the Collateral Trustee
represents and warrants that all representations and warranties set forth in
Exhibit G to this Participation Agreement are true and correct as of the date
hereof and are incorporated herein by reference with the same force and effect
as though herein set forth in full.
Section 3.3 Representations of the Guarantor. In order to induce each
Purchaser to purchase the Notes from the Issuer, the Guarantor represents and
warrants that all representations and warranties set forth in Exhibit H-1 to
this Participation Agreement are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
Section 3.4 Representations of the Tenant. In order to induce each
Purchaser to purchase the Notes from the Issuer, the Tenant represents and
warrants that all representations and warranties set forth in Exhibit H-2 to
this Participation Agreement are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
Section 3.5 Representations of the Owner Beneficiary. In order to
induce each Purchaser to purchase the Notes from the Issuer, the Owner
Beneficiary represents and warrants that all representations and warranties set
forth in Exhibit I to this Participation Agreement are true and correct as of
the date hereof and are incorporated herein by reference with the same force and
effect as though herein set forth in full.
Section 3.6 Representations of the Purchasers.
(a) Each Purchaser represents and warrants that at least one of the
following statements concerning each source of funds to be used by it to pay the
Purchase Price is accurate as of the Closing Date:
(i) the source of funds to be used by it to pay the purchase
price of the Notes is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan, all plans maintained by the same employer or
employee organization, with respect to which the amount of the general
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account reserves and liabilities for all contracts held by or on behalf
of such plan, exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with its state of domicile;
(ii) all or a part of such funds constitute assets of one or
more separate accounts, trusts or a commingled pension trust maintained
by it, and it has disclosed to each of the Collateral Trustee, the
Issuer, the Owner Beneficiary and each Project Borrower, the names of
such employee benefit plans whose assets in such separate account or
accounts or pension trusts exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such account or accounts
or trusts as of the date of such purchase (for the purpose of this
clause (ii), all employee benefit plans maintained by the same employer
or employee organization are deemed to be a single plan);
(iii) all or part of such funds constitute assets of a bank
collective investment fund maintained by it, and it has disclosed to
each of the Collateral Trustee, the Issuer, the Owner Beneficiary and
each Project Borrower, the names of such employee benefit plans whose
assets in such collective investment fund exceed 10% of the total
assets or are expected to exceed 10% of the total assets of such fund
as of the date of such purchase (for the purpose of this clause (iii),
all employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(iv) all or part of such funds constitute assets of one or
more employee benefit plans, each of which has been identified to each
of the Collateral Trustee, the Issuer, the Owner Beneficiary and each
Project Borrower, in writing;
(v) it is acquiring the Notes for the account of one or more
pension funds, trust funds or agency accounts, each of which is a
"governmental plan" as defined in Section 3(32) of ERISA;
(vi) the source of funds is an "investment fund" managed by a
"qualified professional asset manager" or "QPAM" (as defined in Part V
of PTE 84-14, issued March 13, 1984), provided that no other party to
the transactions described in this Participation Agreement and no
"affiliate" of such other party (as defined in Section V(c) of PTE
84-14) has at this time, or during the immediately preceding one year
exercised the authority to appoint or terminate said QPAM as manager of
the assets of any plan identified in writing pursuant to this clause
(vi) or to negotiate the terms of said QPAM's management agreement on
behalf of any such identified plans; or
(vii) if it is other than an insurance company, all or a
portion of such funds consists of funds which do not constitute "plan
assets".
(b) Each Purchaser represents that it is an "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act of 1933, as amended) acting for its own account (and not for the account of
others) or as a fiduciary or agent for others (which others are also "accredited
investors"). Each Purchaser further represents that such Purchaser is acquiring
the Notes for the purpose of investment and not with a view to the distribution
thereof,
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and that such Purchaser has no present intention of selling, negotiating or
otherwise disposing of the Notes; it being understood, however, that the
disposition of such Purchaser's property shall at all times be and remain within
its control.
Each Purchaser understands that the Notes have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or under
any state securities laws, and may not be resold in the absence of registration
unless such sale is exempt from registration under the Securities Act and any
applicable state securities laws.
ARTICLE IV
GUARANTOR COVENANTS
Section 4.1 Reporting Requirements. The Guarantor hereby covenants and
agrees that until payment in full of all principal, premium, if any, and
interest outstanding from time to time under the Notes, the Guarantor will
furnish or cause to be furnished to the Collateral Trustee and each Noteholder:
(a) As soon as available and in any event within forty-five (45)
calendar days after the end of each of its first three fiscal quarters in each
fiscal year, consolidating and consolidated financial statements of the
Guarantor and its Subsidiaries, consisting of a consolidating and consolidated
balance sheet as of the end of such fiscal quarter and related consolidating and
consolidated statements of income, stockholders' equity and cash flows for the
fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end audit adjustments)
by an authorized officer of the Guarantor as having been prepared in accordance
with GAAP, consistently applied, and setting forth in comparative form the
respective financial statements for the corresponding date and period in the
previous fiscal year.
(b) As soon as available and in any event within ninety (90) days after
the end of each fiscal year of the Guarantor, consolidating and consolidated
financial statements of the Guarantor and its Subsidiaries consisting of a
consolidating and consolidated balance sheet as of the end of such fiscal year,
and related consolidating and consolidated statements of income, stockholders'
equity and cash flows for the fiscal year then ended, all in reasonable detail
and setting forth in comparative form the financial statements as of the end of
and for the preceding fiscal year, and certified by independent certified public
accountants of nationally recognized standing satisfactory to the Collateral
Trustee. The certificate or report of accountants shall be free of
qualifications (other than any consistency qualification that may result from a
change in the method used to prepare the financial statements as to which such
accountants concur) and shall not indicate the occurrence or existence of any
event, condition or contingency which would materially impair the prospect of
payment or performance of any covenant, agreement or duty of the Guarantor under
any of the Credit Documents, the Project Loan Documents or the other Operative
Documents to which it is a party.
(c) Concurrently with the delivery of the financial statements
described in the foregoing paragraphs (a) and (b), a certificate executed by the
President or any Vice President of
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the Guarantor certifying that no Event of Default has occurred and is then
continuing as of the date of such financial statements and as of the date of
such certificate.
(d) Concurrently with the delivery of the financial statements
described in the foregoing paragraph (b), a report setting forth for the
corresponding fiscal year (i) with respect to each Mortgaged Property (A) the
return on net assets for such Mortgaged Property, (B) the net sales for such
Mortgaged Property and the corresponding percentage changes for the year earlier
period, and (C) the net sales per square foot for such Mortgaged Property and
(ii) with respect to each Mortgaged Property on an average basis for all other
"super stores" operated by the Tenant and open in the same fiscal year of the
Tenant as such Mortgaged Property has opened (A) the average return on net
assets for all such "super stores," (B) the average net sales for all such
"super stores," (C) the average net sales per square foot for all such "super
stores" and (D) the corresponding figures and corresponding percentage change
for the year earlier period.
(e) promptly, copies of all financial statements and reports and all
press releases that the Guarantor sends to its creditors or shareholders, and
copies of all financial statements and regular, periodical or special reports
(including Forms 10K, 10Q and 8K) that the Guarantor or the Tenant may make to,
or file with, the Securities and Exchange Commission, or any successor thereto.
(f) Such other information respecting the condition or operations,
financial or otherwise, of the Guarantor and the Tenant as the Collateral
Trustee or any Noteholder may from time to time reasonably request.
Section 4.2 Inspection Rights. The Guarantor shall permit
representatives of the Noteholders:
(a) If no Default or Event of Default then exists, at the expense of
such Noteholders and upon reasonable prior notice to the Guarantor, to visit the
principal executive office of the Guarantor, to discuss the affairs, finances
and accounts of the Guarantor and its Subsidiaries with the Guarantor's
officers, and (with the consent of the Guarantor, which consent will not be
unreasonably withheld) its independent public accountants, and (with the consent
of the Guarantor, which consent will not be unreasonably withheld) to visit the
Mortgaged Properties, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) If a Default or an Event of Default then exists, at the expense of
the Guarantor, to visit and inspect any of the offices or properties of the
Guarantor or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Guarantor
authorizes said accountants to discuss the affairs, finances and accounts of the
Guarantor and its Subsidiaries), all at such times and as often as may be
requested.
It is understood and agreed by each such Noteholder that the confidentiality of
"Confidential Information" disclosed to such Noteholder under this Section 4.2
shall be maintained in accordance with the provisions of Section 10.10 hereof.
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Section 4.3 Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Guarantor will pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by each Purchaser in
connection with such transactions. Guarantor will also pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by any Noteholder in
connection with any amendments, waivers or consents under or in respect of this
Participation Agreement or the other Operative Documents (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Participation
Agreement or the other Operative Documents or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Participation Agreement or the other Operative Documents, or by reason of
being a holder of the Notes, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Guarantor or the Tenant or in connection with any work-out or restructuring of
the transactions contemplated hereby and by the Notes. The Guarantor will pay,
and will save each Purchaser harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders.
The obligations of the Guarantor under this Section 4.3 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Participation Agreement or the other Operative Documents, and
the termination of any Lease.
Section 4.4 Payment of Certain Fees and Expenses. The Guarantor shall
pay or cause to be paid (a) the initial and annual fee and reasonable
out-of-pocket expenses of the Trust Company and any necessary co-trustees
(including reasonable counsel fees and expenses) or any successor, for acting as
owner trustee pursuant to the Trust Agreement, (b) the initial and annual fee of
the Owner Beneficiary and any successor beneficial owner, for acting as
beneficial owner pursuant to the Trust Agreement, (c) the initial and annual fee
of the Collateral Trustee and any necessary co-trustees (including reasonable
counsel fees and expenses) or any successor collateral trustee, for acting as
Collateral Trustee, (d) the initial and annual fee of Lord Securities
Corporation, a Delaware corporation, as manager of the Owner Beneficiary
pursuant to a management agreement between the Owner Beneficiary and Lord
Securities Corporation which has been delivered to the Guarantor, and (e) all
costs and expenses incurred by the Trust Company, the Collateral Trustee and the
Owner Beneficiary 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 in giving or withholding of waivers
or consents hereto or thereto or, in the case of the Trust Company, in complying
with any further assurances with respect to the Collateral.
ARTICLE V
DIRECT PAYMENT
Section 5.1 Direct Payment. Notwithstanding anything to the contrary
contained in the Indenture or the Notes, in the case of any Note owned by any
Purchaser or any other Noteholder which has given written notice to the
Collateral Trustee requesting that the
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provisions of this Section 5.1 shall apply, the Collateral Trustee will
punctually pay when due all distributions thereof with respect to said Notes
pursuant to the terms of the Indenture, without any presentment thereof,
directly to such Noteholder at its address set forth in Schedule I hereto or
such other address as such Noteholder may from time to time designate in writing
to the Collateral Trustee or, if a bank account with a United States bank is so
designated for such Noteholder, the Collateral Trustee will make such payments
in immediately available funds to such bank account, no later than 11:00 a.m.,
New York City time, on the date due, marked for attention as indicated, or in
such other manner or to such other account in any United States bank as such
Noteholder may from time to time direct in writing.
ARTICLE VI
DEFINITIONS
Section 6.1 General Definitions. As used herein, the following terms
have the respective meanings set forth below:
"After Tax Basis" shall mean with respect to any payment to be received
by a Tax Indemnitee, the amount of such payment supplemented by a further
payment or payments so that, after deducting from such aggregate payments the
amount of all taxes (net of any actual current credits, deductions or other tax
benefits arising from the payment by the Tax Indemnitee of any amount, including
taxes, for which the payment to be received is made) actually imposed currently
on the Tax Indemnitee by any Governmental Authority or taxing authority with
respect to such payments, the balance of such payment shall be equal to the
original payment to be received; provided, however, that for the purposes of
this definition it shall be assumed that for any Noteholder as an Indemnified
Person (or any Affiliate thereof) Federal, state and local income taxes are
payable at the highest marginal Federal, state and local statutory income tax
rates applicable to corporations from time to time.
"Annual Statements" is defined on Exhibit H-1 paragraph (6).
"Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses (including,
without limitation, reasonable attorney's fees and expenses) of any nature
whatsoever.
"Collateral Trustee" is defined in the Introductory paragraphs of this
Participation Agreement.
"Closing Date" is defined in Section 1.2.
"Confidential Information" is defined in Section 10.10 of this
Participation Agreement.
"Environmental Laws" shall have the meaning assigned thereto in the
Lease Appendix.
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"Environmental Violation" shall have the meaning assigned thereto in
the Lease Appendix.
"GAAP" shall mean generally accepted accounting principles as are in
effect from time to time and applied on a basis consistent with the Historical
Statements both as to classification of items and amounts.
"Governmental Authority" shall have the meaning assigned thereto in the
Lease Appendix.
"Guarantor" is defined in the Introductory paragraphs of this
Participation Agreement.
"Hazardous Substance" shall have the meaning assigned thereto in the
Lease Appendix.
"Historical Statements" is defined on Exhibit H-1 paragraph (6).
"Impositions" shall mean, except to the extent described in the
following sentence, any and all liabilities, losses, expenses and costs of any
kind whatsoever for fees, taxes, levies, imposts, duties, charges, assessments
or withholdings ("Taxes") (including (i) real and personal property taxes,
including personal property taxes on any property covered by a Lease that is
classified by any governmental authority as personal property, and real estate
or ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii) any
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes and
documentary recording taxes and fees; (v) taxes that are or are in the nature of
franchise, income, value added, privilege and doing business taxes, license and
registration fees; and (vi) assessments on any Mortgaged Property, including all
assessments for public improvements or benefits, whether or not such
improvements are commenced or completed within the term of such Lease), and in
each case all interest, additions to tax and penalties thereon, which at any
time prior to, during or with respect to the term of such Lease or in respect of
any period for which the Tenant shall be obligated to pay Supplemental Rent (as
defined in the respective Leases), may be levied, assessed or imposed by any
Federal, state, city, county or local authority upon or with respect to (a) any
Mortgaged Property or any part thereof or interest therein; (b) the financing,
refinancing, demolition, construction, substitution, subleasing, assignment,
control, condition, occupancy, servicing, maintenance, repair, ownership,
possession, activity conducted on, delivery, insuring, use, operation,
improvement, transfer of title, return or other disposition of such Mortgaged
Property or any part thereof or interest therein; (c) the Notes or the Project
Loan Notes or other indebtedness with respect to any Mortgaged Property or any
part thereof or interest therein; (d) the rentals, receipts or earnings arising
from any Mortgaged Property or any part thereof or interest therein; (e) the
Operative Documents or any payment made or accrued pursuant thereto; (f) the
income or other proceeds received with respect to any Mortgaged Property, or any
part thereof or interest therein upon the sale or disposition thereof; (g) the
issuance of the Notes or the Project Loan Notes; or (h) otherwise in connection
with the transactions contemplated by the Operative Documents.
The term "Imposition" shall not mean or include:
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Participation Agreement
(i) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or property
taxes) that are imposed on a Tax Indemnitee by the United States
federal government that are based on or measured by the net income
(including taxes based on capital gains and minimum taxes) of such
Person; provided that this clause (i) shall not be interpreted to
prevent a payment from being made on an After Tax Basis if such payment
is otherwise required to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or property
taxes) that are imposed by any state or local jurisdiction and that are
based upon or measured by the gross or net income or gross or net
receipts (including any minimum taxes, withholding taxes or taxes on or
measured by capital stock, franchise or doing business taxes) except
that this clause (ii) shall not apply to (and thus shall not exclude)
any such Taxes imposed on a Tax Indemnitee by the state (or any local
taxing authority thereof or therein) where any Mortgaged Property is
located, possessed or used under each Lease; provided that this clause
(ii) shall not be interpreted to prevent a payment from being made on
an After Tax Basis if such payment is otherwise required to be so made;
(iii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs after the
termination of a Lease with respect to a Mortgaged Property (but not
any Tax or imposition that relates to any period prior to the
termination of each Lease);
(iv) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions of
Section 9.2(g);
(v) any interest or penalties imposed on a Tax Indemnitee as
a result of the failure of such Tax Indemnitee to file any return or
report timely and in the form prescribed by law or to pay any Tax or
imposition, except to the extent such failure is a result of a breach
by such Tax Indemnitee of its obligations under Section 9.2; provided,
that this clause (v) shall not apply (x) if such interest or penalties
arise as a result of a position taken (or requested to be taken) by the
Tenant in a contest controlled by the Tenant under Section 9.2(g) or
(y) to any such interest or penalties that result from such Tax
Indemnitee's complying with the reporting procedures set forth in
Section 9.2;
(vi) any Taxes or impositions imposed on the Tenant that are
a result of the Tenant not being considered a "United States person" as
defined in Section 7701(a)(30) of the Code;
(vii) any Taxes or impositions that are enacted or adopted by
their express terms as a substitute for any Tax that would not have
been indemnified against pursuant to the terms of Section 9.2;
(viii) any Taxes which are imposed on a Tax Indemnitee as a
result of a breach of a covenant or representation by such Tax
Indemnitee in any Operative Document
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(unless caused by the Tenant's breach of its representations,
warranties and covenants) or as a result of the gross negligence or
willful misconduct of such Tax Indemnitee itself (as opposed to gross
negligence or willful misconduct imputed to such Tax Indemnitee), but
not Taxes imposed as a result of ordinary negligence of such Tax
Indemnitee;
(ix) any Taxes or impositions imposed on the Tenant to the
extent that such Taxes are actually reimbursed to the Tenant by another
Person other than an Affiliate of the Tenant;
(x) any Taxes or impositions imposed upon the Tenant with
respect to any voluntary transfer, sale, financing or other voluntary
disposition by a Project Borrower (other than a transfer contemplated
and permitted by the Operative Documents, including any transfer in
connection with (1) the exercise by the Tenant of any purchase option
under any Lease, (2) the occurrence of an Event of Default, or (3) a
Casualty Event or Condemnation Event affecting any Mortgaged Property)
of any interest in any Mortgaged Property or any interest in, or
created pursuant to, the Operative Documents or any voluntary transfer
of any interest in the Tenant (other than in connection with the
existence of a Lease Event of Default) or any involuntary transfer of
any of the foregoing interests resulting from the bankruptcy or
insolvency of the Tenant (other than in connection with the existence
of an Event of Default);
(xi) any gift or inheritance Taxes;
(xii) any Taxes or impositions imposed on a Tax Indemnitee,
to the extent such Tax Indemnitee actually receives a credit (or
otherwise has a reduction in a liability for Taxes) in respect thereof
against Taxes that are not indemnified hereunder (but only to the
extent such credit is not taken into account in calculating the
indemnity payment on an After Tax Basis);
(xiii) any Tax or imposition to the extent that such Tax or
imposition is imposed on a Tax Indemnitee in respect of a transaction
or business in the jurisdiction imposing such Tax other than the
transactions arising out of the Operative Documents; or
(xiv) any Tax or imposition imposed on a direct or indirect
transferee, successor or assign of the Tenant to the extent of the
excess of such Taxes over the amount of such Taxes that would have been
imposed had there not been a transfer by the Tenant of an interest
arising under the Operative Documents; provided that there shall not be
excluded under this clause (xiv) any such Tax or imposition if such
direct or indirect transferee, successor or assign of the Tenant
acquired its interest as a result of a transfer in connection with an
Event of Default; provided, further, that there shall not be excluded
under this clause (xiv) any amount necessary to make any payment on an
After Tax Basis.
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Any tax or imposition excluded from the defined term "Imposition" in any one of
the foregoing clauses (i) through (xiv) shall not be construed as constituting
an Imposition by any provision of any other of the aforementioned clauses.
"Indemnified Person" shall mean the Trust Company, the Issuer, the
Collateral Trustee, in its individual capacity and its trust capacity, each
Noteholder, and the Owner Beneficiary and their respective successors, assigns,
directors, shareholders, partners, officers, employees, agents and Affiliates.
"Indenture" is defined in the Introductory paragraphs of this
Participation Agreement.
"Interim Statements" is defined on Exhibit H-1 paragraph (6).
"Issuer" is defined in the Introductory paragraphs of this
Participation Agreement.
"Lease Appendix" shall mean the appendix of defined terms attached to
each Lease.
"Material Adverse Effect" shall have the meaning assigned thereto in
the Lease Appendix.
"Noteholder" shall mean the Person in whose name a Note is registered
in accordance with the provisions of the Indenture.
"Notes" is defined in the Introductory paragraphs of this Participation
Agreement.
"Officer's Certificate" shall mean a certificate of the chief financial
officer, treasurer, or other officer of such Person whose responsibilities
extend to the subject matter of such certificate.
"Owner Beneficiary" is defined in the Introductory paragraph of this
Participation Agreement.
"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Purchase Price" is defined in Section 1.1.
"Purchasers" is defined in the Introductory paragraphs of this
Participation Agreement.
"Related Person" is defined in Section 10.12 of this Participation
Agreement.
"Subsidiary" of any Person shall mean any corporation, partnership,
joint venture, trust or estate of which (or in which) more than 50% of:
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(i) the outstanding capital stock having voting power to
elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class
or classes of such corporation shall or might having voting power upon
the occurrence of any contingency),
(ii) the interest in the capital or profits of such
partnership or joint venture, or
(iii) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries.
"Tax Indemnitee" shall mean a Project Borrower, the Noteholders, the
Issuer, the Trust Company, the Collateral Trustee, in its individual capacity
and its trust capacity, the Owner Beneficiary and their respective successors,
assigns, participants, directors, shareholders, partners, officers, employees,
agents and Affiliates.
"Taxes" is defined in the definition of "Imposition."
"Tenant" is defined in the Introductory paragraph of this Participation
Agreement.
"Trust Company" is defined in the Introductory paragraphs of this
Participation Agreement.
"Trust Estate" shall have the meaning assigned thereto in the Trust
Agreement.
Section 6.2 Indenture Definitions. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned thereto in the
Indenture.
ARTICLE VII
OTHER COVENANTS AND AGREEMENTS
Section 7.1 Covenants of the Trust Company, the Issuer, the Collateral
Trustee and the Owner Beneficiary. The Trust Company, the Issuer, the Collateral
Trustee and the Owner Beneficiary hereby covenant and agree (as to itself only)
with the other parties hereto that, so long as this Participation Agreement is
in effect:
(a) Discharge of Lien. Each of the Owner Beneficiary, the Issuer and
the Trust Company 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 Liens on the Mortgaged Property or
the other Collateral (other than the Liens arising under or contemplated by the
Operative Documents) attributable to it or any of its Affiliates.
(b) Trust Agreement. Without prejudice to any right under the Trust
Agreement of the Trust Company to resign, or the Owner Beneficiary's right under
the Trust Agreement to
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Participation Agreement
remove the institution acting as owner trustee under the Trust Agreement, the
Owner Beneficiary hereby agrees with the Collateral Trustee and the Tenant (i)
not to terminate or revoke the trust created by the Trust Agreement, (ii) not to
amend, supplement, terminate or revoke or otherwise modify any provision of the
Trust Agreement in such a manner as to adversely affect the rights of any such
party without the prior written consent of such party, (iii) to comply with all
of the terms of the Trust Agreement, the nonperformance of which would adversely
affect such party and (iv) not to remove the Trust Company as owner trustee
under the Trust Agreement.
(c) Successor Trust Company. Subject to Section 8.1 of the Trust
Agreement, a successor owner trustee under the Trust Agreement may be appointed,
and a corporation may become the owner trustee under the Trust Agreement, only
with the consent of the Tenant and the Collateral Trustee, which consent shall
not be unreasonably withheld or delayed.
(d) Indebtedness; Other Business. Neither the Issuer nor the Owner
Beneficiary shall contract for, create, incur or assume any indebtedness, or
enter into any business or other activity, other than pursuant to or under the
Operative Documents.
(e) No Violation. Neither the Collateral Trustee nor the Owner
Beneficiary will instruct the Issuer to take any action in violation of the
terms of any Operative Document.
(f) No Voluntary Bankruptcy. The Owner Beneficiary shall not (i)
commence any case, proceedings 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 (ii) 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 Owner Beneficiary nor the
Issuer 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.
(g) Change of Principal Place of Business. The Issuer and the Owner
Beneficiary shall give prompt notice to the Tenant and the Collateral Trustee if
the Trust Company's principal place of business or chief executive office, or
the office where the records concerning the accounts or contract rights relating
to the Mortgaged Properties are kept, shall cease to be located at the location
described in Exhibit F, paragraph 8 or if it shall change its name, identity or
corporate structure.
(h) Operative Documents. Neither the Issuer nor the Owner Beneficiary
shall consent to or permit, and the Owner Beneficiary shall not take any action
for the purpose of permitting the Issuer to consent to or permit, any amendment,
supplement or other modification of the terms and provisions of the Operative
Documents, in each case without the prior written consent of the Tenant and the
Collateral Trustee.
Section 7.2 Guarantor's Operative Document Rights. Each of the parties
hereto agrees that, unless and until any Lease Event of Default shall have
occurred and be continuing, it will not enter into any amendments or
modifications of any Operative Document without the prior written consent of the
Guarantor.
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Participation Agreement
Section 7.3 Covenants of the Collateral Trustee The Collateral Trustee
(in its individual capacity and in its trust capacity) hereby covenants and
agrees with the other parties hereto that, so long as this Participation
Agreement is in effect:
(a) Discharge of Lien. The Collateral Trustee (in its individual
capacity and in its trust capacity) 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 Liens on any
Mortgaged Property or the Collateral attributable to it or any of its Affiliates
(other than Liens arising under or pursuant to any Operative Document);
provided, however, that the Collateral Trustee shall not be required to so
discharge any such Lien while the same is being contested in good faith by
appropriate proceedings diligently prosecuted so long as such proceedings shall
not involve any material danger or impairment of the Liens of the Operative
Documents or of the sale, forfeiture or loss of, and shall not interfere with
the use or disposition of, any Mortgaged Property or title thereto or any
interest therein or the payment of rent under any Lease or the Trust Estate (as
defined in the Trust Agreement).
(b) Successor Collateral Trustee. A successor Collateral Trustee may be
appointed, and a corporation may become the Collateral Trustee under the
Indenture, only with the consent of the Tenant and the Purchasers, which consent
in the case of the Tenant shall be limited to approval of such successor
Collateral Trustee's fees.
Section 7.4 Collateral Trustee Project Loan Agreement Rights.
Notwithstanding anything to the contrary contained in any Project Loan Document,
the Collateral Trustee, the Guarantor, the Tenant, the Purchasers, the Issuer,
the Trust Company and the Owner Beneficiary hereby agree that the Collateral
Trustee, as agent on behalf of the Issuer in accordance with the Collateral
Trust Indenture, shall have the right to make all decisions, receive all
payments and take all actions on behalf of the Issuer under each Project Loan
Document.
ARTICLE VIII
TRANSFER OF INTEREST
Section 8.1 Restrictions of Transfer. The Owner Beneficiary may not,
directly or indirectly, assign, convey or otherwise transfer any of its right,
title or interest in or to the Trust Estate or the Trust Agreement. Any transfer
by the Owner Beneficiary as above provided, shall only be effected pursuant to
an agreement in form and substance reasonably satisfactory to the Collateral
Trustee, the Trust Company, the Tenant, and their respective counsel.
Section 8.2 Effect of Transfer. From and after any transfer effected in
accordance with this Section 8, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer. Notwithstanding any transfer of all or a portion of the
Owner Beneficiary's interest as provided in this Section 8, the transferor shall
be entitled to all benefits accrued and all rights vested prior to such
transfer, including, without limitation, rights to indemnification under any
such document.
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ARTICLE IX
INDEMNIFICATION
Section 9.1 General Indemnity. The Guarantor and the Tenant, jointly
and severally, hereby assume liability for and agree to defend, indemnify and
hold harmless each Indemnified Person on an After Tax Basis from and against any
and all Claims, which may be imposed on, incurred by or asserted against an
Indemnified Person (other than to the extent such Claims arise from the gross
negligence, willful misconduct or willful breach of such Indemnified Person) in
any way relating to or arising out of the execution, delivery, performance or
enforcement of this Participation Agreement, or any other Operative Document or
on or with respect to any Mortgaged Property, including, without limitation,
Claims in any way relating to or arising out of (a) the financing or
refinancing, purchase, acceptance, rejection, ownership, design, leasing,
subleasing, possession, use, operation, repair, modification, condition, sale,
return, repossession (whether by summary proceedings or otherwise), or any other
disposition of a Mortgaged Property or any part thereof; (b) any latent or other
defects in any Property whether or not discoverable by any Indemnified Person or
the Tenant; (c) the Operative Documents, or any transaction contemplated
thereby; (d) any breach by the Guarantor or the Tenant of any of their
representations or warranties under the Operative Documents or failure by the
Guarantor or the Tenant to perform or observe any covenant or agreement to be
performed by them under any of the Operative Documents; and (e) personal injury,
death or property damage, including Claims based on strict liability in tort;
but excluding (i) Claims (except Claims against the Trust Company (including
claims arising from Taxes or other impositions set forth in clause (iii) of the
exclusions to the definition of "Impositions" set forth in Article VI)) to the
extent such Claims arise solely out of events occurring after the expiration of
the terms of all Leases and after the Tenant's discharge of all its obligations
under the Operative Documents or (ii) any Taxes (disregarding with respect to
the Trust Company the exclusions set forth in clause (v), to the extent
attributable to action taken or not taken by the Issuer at the direction of the
Owner Beneficiary or the Collateral Trustee, and clause (ix) of the exclusions
to the definition of Impositions set forth in Article VI) including any Claim
(or any portion of a Claim) made upon an Indemnified Person by a third party
that at its origin is based upon a Tax (other than amounts necessary to make any
payments hereunder on an After Tax Basis, where the Tenant is otherwise
specifically required to make such payments on an After Tax Basis). The
Guarantor and the Tenant shall be entitled to control, and shall assume full
responsibility for the defense of any Claim; provided, however, that any
Indemnified Person named in such Claim, may each retain separate counsel at the
expense of the Tenant and the Guarantor; provided, further, that such parties
shall use reasonable efforts to share counsel to the extent practicable and
minimize the fees of counsel being reimbursed hereunder. The Tenant, the
Guarantor and each Indemnified Person agree to give each other prompt written
notice of any Claim hereby indemnified against but the giving of any such notice
by an Indemnified Person shall not be a condition to the Tenant's and
Guarantor's obligation under this Section 9.1, except to the extent failure to
give such notice prejudices the Tenant's or Guarantor's rights hereunder. After
an Indemnified Person has been fully indemnified for a Claim pursuant to this
Section 9.1, and so long as no default shall have occurred and be continuing
under any Lease, the Tenant and the Guarantor shall be subrogated to any right
of such Indemnified Person (except against another Indemnified Person) with
respect to such Claim.
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Participation Agreement
Section 9.2 General Tax Indemnity.
(a) Indemnification. The Tenant shall pay and assume liability for, and
hereby agrees to indemnify, protect and defend each Mortgaged Property and all
Tax Indemnitees, and hold them harmless against, all Impositions on an After Tax
Basis. Each Tax Indemnitee agrees to use good-faith efforts (but not including
increasing liability for Taxes not indemnifiable hereunder) to minimize the
amount of Taxes indemnifiable by the Tenant during any taxable year; provided
that this sentence shall not be construed to limit or impair any right of the
Issuer set forth in the Operative Documents. Each Tax Indemnitee further agrees
to comply with recommendations made by the Tenant regarding techniques to
minimize Taxes indemnifiable hereunder; provided that (i) the Tenant agrees to
make payments to (or otherwise indemnify) such Tax Indemnitee against any cost
or expense arising from instituting the Tenant's recommendations and (ii) such
Tax Indemnitee determines in its sole discretion that such recommendations will
not have an adverse impact on such Tax Indemnitee.
(b) Refunds. Provided that no Default or Event of Default has occurred
and is continuing, if any Tax Indemnitee obtains a refund or a reduction in a
liability (but only if such reduction relates to a Tax not otherwise
indemnifiable hereunder and has not been taken into account in determining the
amount of a payment on an After Tax Basis) as a result of any Imposition paid or
reimbursed by the Tenant (in whole or in part), such Tax Indemnitee shall
promptly pay to the Tenant the lesser of (x) the amount of such refund or
reduction in liability and (y) the amount previously so paid or advances by the
Tenant, in each case net of reasonable expenses not already paid or reimbursed
by the Tenant.
(c) Payments. (i) Subject to the terms of Section 9.2(g), the Tenant
shall pay or cause to be paid all Impositions directly to the taxing authorities
where feasible and otherwise to the Tax Indemnitee, as appropriate, and the
Tenant shall at its own expense, upon such Tax Indemnitee's reasonable request,
furnish to such Tax Indemnitee copies of official receipts or other satisfactory
proof evidencing such payment.
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 9.2(g) and which the Tenant pays directly to the
taxing authorities, the Tenant shall pay such Impositions prior to the latest
time permitted by the relevant taxing authority for timely payment. In the case
of Impositions for which the Tenant reimburses a Tax Indemnitee, the Tenant
shall do so within twenty (20) days after receipt by the Tenant of demand by
such Tax Indemnitee describing in reasonable detail the nature of the Imposition
and the basis for the demand (including the computation of the amount payable),
but in no event shall the Tenant be required to pay such reimbursement prior to
thirty (30) days before the latest time permitted by the relevant taxing
authority for timely payment. In the case of Impositions for which a contest is
conducted pursuant to Section 9.2(g), the Tenant shall pay such Impositions or
reimburse such Tax Indemnitee for such Impositions, to the extent not previously
paid or reimbursed pursuant to Section 9.2(a), prior to the latest time
permitted by the relevant taxing authority for timely payment after conclusion
of all contests under Section 9.2(g).
(iii) Impositions imposed with respect to a Mortgaged Property
for a billing period during which a Lease expires or terminates with respect to
such Mortgaged Property (unless the Tenant has exercised the purchase option set
forth in the respective Lease with
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Participation Agreement
respect to such Mortgaged Property) shall be adjusted and prorated on a daily
basis between the Tenant and the applicable Project Borrower, whether or not
such Imposition is imposed before or after such expiration or termination and
each party shall pay or reimburse the other for each party's pro rata share
thereof.
(iv) At the Tenant's request, the amount of any
indemnification payment by the Tenant pursuant to Section 9.2(a) shall be
verified and certified by an independent public accounting firm mutually
acceptable to the Tenant and the Tax Indemnitee. The fees and expenses of such
independent public accounting firm shall be paid by the Tenant unless such
verification shall result in an adjustment in the Tenant's favor of 5 % or more
of the payment as computed by the Tax Indemnitee, in which case such fee shall
be paid by the Tax Indemnitee.
(d) Reports and Returns. (i) The Tenant shall be responsible for
preparing and filing any real and personal property or ad valorem tax returns in
respect of each Mortgaged Property. In case any other report or tax return shall
be required to be made with respect to any obligations of the Tenant under or
arising out of Section 9.2(a) and of which the Tenant has knowledge or should
have knowledge, the Tenant, at its sole cost and expense, shall notify the
relevant Tax Indemnitee of such requirement and (except if such Tax Indemnitee
notifies the Tenant that such Person intends to file such report or return) (A)
to the extent required or permitted by and consistent with applicable laws, make
and file in its own name such return, statement or report; and (B) in the case
of any other such return, statement or report required to be made in the name of
such Tax Indemnitee, advise such Tax Indemnitee of such fact and prepare such
return, statement or report for filing by such Tax Indemnitee or, where such
return, statement or report shall be required to reflect items in addition to
any obligations of the Tenant under or arising out of Section 9.2(a), provide
such Tax Indemnitee at the Tenant's expense with information sufficient to
permit such return, statement or report to be properly made with respect to any
obligations of the Tenant under or arising out of Section 9.2(a). Such Tax
Indemnitee shall, upon the Tenant's request and at the Tenant's expense, provide
any data maintained by such Tax Indemnitee (and not otherwise within the control
of the Tenant) with respect to each Mortgaged Property which the Tenant may
reasonably require to prepare any required tax returns or reports.
(e) Income Inclusions. If as a result of the payment or reimbursement
by the Tenant of any costs and expenses of the Issuer, the Owner Beneficiary or
any of their respective Affiliates incurred in connection with the transactions
contemplated by the Operative Documents, the Issuer, the Owner Beneficiary or
any of their respective Affiliates shall suffer a net increase in any federal,
state or local income tax liability, the Tenant shall indemnify the Issuer, the
Owner Beneficiary or any of their respective Affiliates (without duplication of
any indemnification required by Section 9.2(a)) on an After Tax Basis for the
amount of such increase. The calculation of any such net increase shall take
into account any current or future tax savings realized or reasonably expected
to be realized by the Issuer, the Owner Beneficiary or any of their respective
Affiliates, in respect thereof, as well as any interest, penalties and additions
to tax payable by the Issuer, the Owner Beneficiary or any of their respective
Affiliates.
(f) Withholding Taxes. As between the Tenant and the Issuer, the Tenant
shall be responsible for, and the Tenant shall indemnify and hold harmless the
Issuer (without duplication of any indemnification required by Section 9.2(a))
on an After Tax Basis against, any obligation
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Participation Agreement
for United States withholding taxes imposed in respect of the interest payable
on the Project Loan Notes to the extent, but only to the extent, the Issuer has
actually paid funds to a taxing authority with respect to such withholding taxes
(and, if the Issuer receives a demand for such payment from any taxing
authority, the Tenant shall discharge such demand on behalf of the Issuer).
(g) Contests of Tax. (i) If a written claim is made against any Tax
Indemnitee or if any proceeding shall be commenced against such Tax Indemnitee
(including a written notice of such proceeding), for any Imposition, such Tax
Indemnitee shall promptly notify the Tenant in writing and shall not take action
with respect to such claim or proceeding without the consent of the Tenant for
thirty (30) days after the receipt of such notice by the Tenant; provided,
however, that, in the case of any such claim or proceeding, if action shall be
required by law or regulation to be taken prior to the end of such 30-day
period, such Tax Indemnitee shall, in such notice to the Tenant, inform the
Tenant, and no action shall be taken with respect to such claim or proceeding
without the consent of the Tenant before the termination of such shorter period;
provided, further, that the failure of such Tax Indemnitee to give the notices
referred to this sentence shall not diminish the Tenant's obligation hereunder
except to the extent such failure precludes the Tenant from contesting all or
part of such claim.
(ii) If, within thirty (30) days of receipt of such notice
from the Tax Indemnitee (or such shorter period as the Tax Indemnitee is
required by law or regulation for the Tax Indemnitee to commence such contest),
the Tenant shall request in writing that such Tax Indemnitee contest such
Imposition, the Tax Indemnitee shall, at the expense of the Tenant, in good
faith conduct and control such contest (including, without limitation, by
pursuit of appeals) relating to the validity, applicability or amount of such
Tax (provided, however, that (A) if such contest can be pursued independently
from any other proceeding involving a tax liability of such Tax Indemnitee, the
Tax Indemnitee, at the Tenant's request, shall allow the Tenant to conduct and
control such contest and (B) in the case of any contest, the Tax Indemnitee may
request the Tenant to conduct and control such contest) by, in the sole
discretion of the Person conducting and controlling such contest, (1) resisting
payment thereof, (2) not paying the same except under protest, if protest is
necessary and proper, (3) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings,
or (4) taking such other action as is reasonably requested by the Tenant from
time to time.
(iii) The party controlling any contest shall consult in good
faith with the noncontrolling party and shall keep the non-controlling party
reasonably informed as to the conduct of such contest; provided that all
decisions ultimately shall be made in the sole discretion of the controlling
party. The parties agree that 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 the
Tenant that otherwise would be payable in respect of such claim (and any future
claim by any taxing authority with respect to other taxable periods that are
based, in whole or in part, upon the resolution of such claim) and shall pay to
the Tenant any amount previously paid or advanced by the Tenant pursuant to this
Section 9.2 by way of indemnification or advance for the payment of an
Imposition.
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Participation Agreement
(iv) Notwithstanding the foregoing provisions of this Section
9.2, a Tax Indemnitee shall not be required to take any action and the Tenant
shall not be permitted to contest any Tax in its own name or that of the Tax
Indemnitee unless (A) the Tenant shall have agreed to pay and shall pay to such
Tax Indemnitee on demand and on an After Tax Basis all reasonable costs, losses
and expenses that such Tax Indemnitee actually incurs in connection with
contesting such Tax, including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements, (B) in the case of a claim
that must be pursued in the name of a Tax Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in an audit involving
such Tax Indemnitee) for which the Tenant may be liable to pay an indemnity
under this Section 9.2 exceeds $1,000,000, (C) the 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 Mortgaged Property, or any
part thereof or interest therein, will not interfere with the payment of rent
under any Lease, and will not result in risk of criminal liability, (D) if such
contest shall involve the payment of the Imposition prior to the contest, the
Tenant 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), (E) in the case of a
claim that must be pursued in the name of a Tax Indemnitee (or an Affiliate
thereof), the Tenant shall have provided to such Tax Indemnitee an opinion of
independent tax counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Tenant stating that a reasonable basis exists to contest
such claim (or, in the case of an appeal of an adverse determination, an opinion
of such counsel to the effect that there is substantial authority for the
position asserted in such appeal) and (F) no Event of Default shall have
occurred and be continuing. In no event shall a Tax Indemnitee be required to
appeal an adverse judicial determination to the United State Supreme Court. In
addition, a Tax Indemnitee shall not be required to contest any claim in its
name (or that of an Affiliate) if the subject matter thereof shall be of a
continuing nature and shall have previously been decided adversely by a court of
competent jurisdiction pursuant to the contest provisions of this Section 9.2,
unless there shall have been a change in law (or interpretation thereof) and the
Tax Indemnitee shall have received, at the Tenant's expense, an opinion of
independent tax counsel selected by the Tax Indemnitee and reasonably acceptable
to the Tenant stating that as a result of such change in law (or interpretation
thereof), it is more likely than not that the Tax Indemnitee will prevail in
such contest.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments, Etc. No amendment or waiver of any provision
of this Participation Agreement, and no consent to any departure by any party
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the parties hereto, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
Section 10.2 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier) and
telecopied, if the sender on the same day sends a confirming copy of such notice
by a recognized overnight delivery service (charges
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Participation Agreement
prepaid), or sent by courier, charges prepaid, for delivery at the following
address (or at such other address as shall be designated by such party in a
written notice to the other Persons listed below):
(a) if to the Issuer, to
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Guarantor or Tenant, to:
Borders Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(c) if to Owner Beneficiary, to:
c/o Lord Securities Corporation
Two ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(d) if to the Collateral Trustee, to:
First Security Bank, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(e) if to a Purchaser, to its address specified in Schedule I hereto
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Participation Agreement
Unless otherwise stated herein, all such notices and communications shall be
effective (i) if sent by courier, when delivered by hand on the day of delivery
or (ii) if telecopied, when received (provided such receipt is (x) verified by a
telephone call to the recipient or (y) confirmed by a transmission report
evidencing successful transmission). Copies of all notices and other
communications sent pursuant to the Indenture and the Trust Agreement shall be
sent to the Guarantor and Tenant.
Section 10.3 No Waiver; Remedies. No remedy conferred herein is
intended to be exclusive of any other remedy, but every such remedy shall be
cumulative and shall be in addition to every other remedy herein conferred or
now or hereafter existing in law or in equity. No failure to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
Section 10.4 Binding Effect; Term; Assignability. This Participation
Agreement shall be binding upon the parties hereto and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Section 10.5 Governing Law. This Participation Agreement shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
Section 10.6 Execution in Counterparts. This Participation Agreement
may be executed in two or more counterparts and by each party hereto in a
separate counterpart, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
Section 10.7 Third Party Beneficiaries. Nothing expressed or implied
herein is intended or shall be construed to confer upon or to give to any
Person, other than the parties hereto, any right, remedy or claim under or by
reason of this Participation Agreement, and any terms, covenants, conditions,
promises and agreements contained herein shall be for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns.
Section 10.8 Survival of Covenants and Representations. All covenants,
representations and warranties made by any party to any other party herein or in
any Note delivered pursuant hereto, whether or not in connection with the
Closing Date, shall be considered to have been relied upon by such other party
and shall survive the issuance of the Notes and the delivery of this
Participation Agreement and shall survive until all of the Project Loans have
been paid in full.
Section 10.9 Severability. Should any part of this Participation
Agreement for any reason by declared invalid, such decision shall not affect the
validity of any remaining portion, which remaining portion shall remain in full
force and effect as if this Participation Agreement had been executed with the
invalid portion thereof eliminated and it is hereby declared the intention of
the parties hereto that they would have executed the remaining portion of this
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Participation Agreement
Participation Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid.
Section 10.10 Confidential Information. For the purposes of this
Section 10.10, "Confidential Information" means information delivered to the
Collateral Trustee or Noteholder by or on behalf of the Guarantor or the Tenant
in connection with the transactions contemplated by or otherwise pursuant to
this Participation Agreement that is confidential or proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by the Collateral Trustee or any Noteholder as being confidential
information of the Guarantor or the Tenant, provided that such term does not
include information that (a) was publicly known or otherwise known to the
Collateral Trustee or any Noteholder prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by the Collateral
Trustee or any Noteholder or any Person acting on behalf of the Collateral
Trustee or any Noteholder, (c) otherwise becomes known to the Collateral Trustee
or any Noteholder other than through disclosure by the Guarantor or the Tenant
or (d) constitutes financial statements delivered to the Collateral Trustee or
any Noteholder under Section 4.1 that are otherwise publicly available.
The Collateral Trustee and each Noteholder will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by the Collateral Trustee and each Noteholder in good faith to protect
confidential information of third parties delivered to the Collateral Trustee or
such Noteholder, provided that the Collateral Trustee and each Noteholder may
deliver or disclose Confidential Information to: (i) directors, trustees,
officers, employees, attorneys and affiliates of the Collateral Trustee or any
Noteholder (to the extent such disclosure reasonably relates to the
administration of the investment represented by the Notes); (ii) financial
advisors and other professional advisors of the Collateral Trustee or any
Noteholder who agree to hold confidential the Confidential Information in
accordance with the terms of this Section 10.10; (iii) with prior written notice
to the Guarantor, any Institutional Holder to which any Noteholder sells or
offers to sell a Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 10.10 and a copy of
such written agreement has been delivered to the Guarantor); (v) with prior
written notice to the Guarantor, any Person from which any Noteholder offers to
purchase any security of the Guarantor (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 10.10 and a copy of such written agreement has been
delivered to the Guarantor); (vi) any federal or state regulatory authority
having jurisdiction over the Collateral Trustee or any Noteholder but only to
the extent such information is expressly required to be disclosed by such
regulatory authority (with written notice of such disclosure given to the
Guarantor promptly following such disclosure); (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about the
investment portfolio of any Noteholder (with written notice of such disclosure
given to the Guarantor promptly following such disclosure); or (viii) with prior
written notice to the Guarantor, any other Person to which such delivery or
disclosure may be necessary, but only (w) to effect compliance with any law,
rule, regulation or order applicable to the Collateral Trustee or any
Noteholder, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which the Collateral Trustee or any Noteholder
is a party or (z) if an Event of Default has occurred and is continuing, to the
extent the Collateral Trustee or any Noteholder may reasonably determine such
delivery and disclosure to be necessary or
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Participation Agreement
appropriate in the enforcement or for the protection of the rights and remedies
under the Notes and this Participation Agreement.
Each Noteholder, by its acceptance of a Note or participation interest
therein, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 10.10 as though it were a party to this Participation
Agreement. On reasonable request by the Guarantor or the Tenant in connection
with the delivery to any Noteholder of information required to be delivered to
such Noteholder under this Participation Agreement or requested by such
Noteholder (other than a Noteholder that is a party to this Participation
Agreement or its nominee), such Noteholder will enter into an agreement with the
Guarantor and the Tenant embodying the provisions of this Section 10.10.
Section 10.11 Issuer Recourse. The parties hereto agree that all of the
statements, representations, warranties, covenants and agreements made by the
Issuer contained in this Participation Agreement are made and intended only for
the purpose of binding the Trust Estate (as defined in the Trust Agreement) and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Participation Agreement to the contrary notwithstanding, no recourse shall be
had with respect to this Participation Agreement against the Trust Company or
against any institution or person which becomes a successor trustee or
co-trustee under the Trust Agreement or any officer, director, trustee, servant
or direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 10.11 shall not be construed to prohibit
any action or proceeding against any party hereto for its own willful misconduct
or grossly negligent conduct; and provided, further, that nothing contained in
this Section 10.11 shall be construed to limit the exercise and enforcement in
accordance with the terms of this Participation Agreement of rights and remedies
against the Trust Estate. The foregoing provisions of this Section 10.11 shall
survive the termination of this Participation Agreement.
Section 10.12 Owner Beneficiary Exculpation. Notwithstanding any other
provision herein, no recourse under any obligation, covenant, agreement or
instrument of the Owner Beneficiary contained in any Operative Document or with
respect hereto shall be had against any incorporator, member, manager, employee,
agent or partner of the Owner Beneficiary or its stockholders or their
affiliates (each a "Related Person") whether arising by breach of contract,
otherwise at law or in equity (including any claim or tort, whether express or
implied); it being expressly understood that the agreements and other
obligations of the Owner Beneficiary herein and with respect hereto are solely
its corporate obligations. Any and all personal liability of any Related Person
for breaches of any such obligation, covenant, agreement or instrument as
aforesaid are hereby expressly waived as a condition of and in consideration of
the Owner Beneficiary's execution of this Participation Agreement.
Notwithstanding any other provision herein, the provisions of this Section 10.12
shall survive the termination of this Participation Agreement.
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Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity except as
expressly stated herein, but solely as
Issuer
By:/s/
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCHEDULE I
(to Participation Agreement)
35
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
▇▇▇▇▇ PROJECT FUNDING CORP.
as Owner Beneficiary
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
I-2
36
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
FIRST SECURITY BANK, N.A.
as Collateral Trustee
By:/s/
-------------------------------
Name:
------------------------
Title:
-----------------------
I-3
37
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
BORDERS GROUP, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
I-4
38
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
BORDERS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
I-5
39
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
STATE OF WISCONSIN
INVESTMENT BOARD
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-6
40
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
MODERN WOODMEN OF AMERICA
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-7
41
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
FEDERATED LIFE INSURANCE
COMPANY
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-8
42
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
FEDERATED MUTUAL INSURANCE
COMPANY
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-9
43
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
COUNTRY LIFE INSURANCE
COMPANY
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-10
44
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
AUTO CLUB INSURANCE
ASSOCIATION
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-11
45
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
BERKSHIRE LIFE INSURANCE
COMPANY
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-12
46
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
HOMESTEADERS LIFE CO.
By:/s/
-----------------------------
Name:
----------------------
Title:
---------------------
I-13
47
Participation Agreement
DESCRIPTION OF CLOSING OPINION
OF COUNSEL FOR PURCHASERS
The closing opinion of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, special counsel to the
Purchasers, called for by ss.2.13(e) of the Participation Agreement, shall be
dated the Closing Date and addressed to each Purchaser, shall be satisfactory in
form and substance to each Purchaser and shall cover such matters relating to
the sale of the Notes as each Purchaser may reasonably request. With respect to
matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and other officers of
the parties involved in the transaction.
EXHIBIT A
(to Participation Agreement)
48
Participation Agreement
DESCRIPTION OF CLOSING OPINIONS
OF COUNSEL FOR ISSUER
The closing opinions of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, special counsel to
the Issuer, called for by SECTION 2.13(A) of the Participation Agreement, shall
be dated the Closing Date and addressed to each Purchaser, shall be satisfactory
in form and substance to each Purchaser and shall be to the effect that:
1. The Trust Company is a Delaware banking corporation, duly
organized and validly existing in good standing under the laws of the
State of Delaware and has all necessary power and authority to enter
into and perform its obligations under the Indenture and act as the
Owner Trustee and to enter into and perform its obligations, as Trust
Company or Owner Trustee, as the case may be, under each of the other
Operative Documents to which the Trust Company or the Owner Trustee, as
the case may be, is a party.
2. The execution, delivery and performance of each Operative
Document to which it is a party, either in its individual capacity or
as the Owner Trustee, as the case may be, has been duly authorized by
all necessary action on its part and neither the execution and delivery
thereof, nor the consummation of the transactions contemplated thereby,
nor compliance by it with any of the terms and provisions thereof (i)
does or will require, to our knowledge, any approval or consent of any
trustee or holder of any of its indebtedness or obligations, (ii) does
or will contravene any current State of Delaware or United States
federal law, governmental rule or regulations relating to its banking
or trust powers, (iii) does or will contravene or result in any breach
of or constitute any default under, or result in the creation of any
Lien upon any of its property under, its charter or by-laws, or, to our
knowledge, without independent investigation, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement or other agreement or instrument to which it is a
party or by which it or its properties may be bound or affected or (iv)
does or will require any approval, consent, filing (other than the
filing of the financing statements in the Office of the Secretary of
State of the State of Delaware as described in paragraph 7 below),
registration or qualification with any governmental body of the State
of Delaware or any of the federal governmental body of the United
States of America governing the banking or trust powers of the Trust
Company.
3. The Indenture and each other Operative Document to which
Trust Company is a party have been duly executed and delivered by Trust
Company, and the Indenture and each such other Operative Document to
the extent entered into by the Trust Company constitutes a legal, valid
and binding obligation enforceable against the Trust Company in
accordance with the terms thereof.
4. Each Operative Document to which the Owner Trustee is a
party have been duly executed and delivered by the Owner Trustee and
constitutes a legal, valid and
EXHIBIT B
(to Participation Agreement)
49
Participation Agreement
binding obligation of the Owner Trustee, enforceable against the
Owner Trustee in accordance with the terms thereof.
5. To our knowledge, without independent investigation, no
investigation or proceeding of or before any arbitrator or any
governmental body, federal, state or local, is pending or threatened by
or against the Trust Company or the Owner Trustee (a) with respect to
any of the Operative Documents or any of the transactions contemplated
thereby, or (b) which could reasonably be expected to have a material
adverse effect on the assets, liabilities, operations, business or
financial condition of the Trust Company or the Owner Trustee.
6. Insofar as Article 9 of the Uniform Commercial Code as in
effect in the State of Delaware (the "UCC") is applicable (without
regard to conflicts of laws principles), and assuming that the security
interests of the Collateral Trustee in the Collateral have been duly
created and have attached (and are of the type that may be perfected by
the filing of a UCC financing statement), no action is required to
perfect such security interests in the State of Delaware, except for
the filing of a UCC financing statement in the Office of the Secretary
of State of the State of Delaware.
The opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger shall cover such other matters
of Delaware law relating to the collateral assignment of the Project Loans and
the issuance of the Notes and the transactions contemplated thereby as each
Purchaser may reasonably request. With respect to matters of fact on which such
opinions are based, such counsel shall be entitled to rely on appropriate
Certificates of public officials and other officers of the parties involved in
the transaction and the representations contained in the Participation
Agreement.
B-2
50
Participation Agreement
DESCRIPTION OF CLOSING OPINIONS
OF COUNSEL FOR COLLATERAL TRUSTEE
The closing opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the
Collateral Trustee called for by SECTION 2.13(B) of the Participation Agreement,
shall be dated the Closing Date and addressed to each Purchaser and shall be
satisfactory in form and substance to each Purchaser and shall be to the effect
that:
1. The Collateral Trustee is a national banking association
validly existing under the laws of the United States and is duly
qualified to act as Collateral Trustee.
2. The Collateral Trustee has the requisite power and
authority to execute, deliver and perform its respective obligations
under the Participation Agreement and the Indenture and the other
Operative Documents to which it is a party ( the "Collateral Trustee
Documents") and has taken all necessary action to authorize the
execution, delivery and performance by it of each of the Collateral
Trustee Documents.
3. Each of the Collateral Trustee Documents has been duly
authorized, executed and delivered by the Collateral Trustee and
constitutes the legal, valid and binding obligation or contract of the
Collateral Trustee enforceable against the Collateral Trustee in
accordance with its respective terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
4. The Notes delivered on the date hereof have been duly
authenticated by the Collateral Trustee in accordance with the terms of
the Indenture.
5. No authorization, consent, approval, license, exemption of
or filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality by the Collateral
Trustee or any affiliate thereof is necessary to the valid execution,
delivery or performance of the Collateral Trustee Documents.
The opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall cover such other matters
relating to the transactions contemplated by the Operative Documents as each
Purchaser may reasonably request. With respect to matters of fact on which such
opinion is based, such counsel shall be entitled to rely on appropriate
certificates of public officials and other officers of the parties involved in
the transaction.
EXHIBIT C
(to Participation Agreement)
51
Participation Agreement
DESCRIPTION OF CLOSING OPINION
OF COUNSEL FOR GUARANTOR
AND TENANT
The closing opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC, special counsel to the
Guarantor and the Tenants, called for by SECTION 2.13(C) of the Participation
Agreement, shall be dated on the Closing Date and shall be satisfactory in form
and substance to each Purchaser and shall be to the effect that:
1. The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of Michigan and has the
corporate power and authority to enter into and perform its obligations
under the Participation Agreement and each other Operative Document to
which the Guarantor is a party (the "Guarantor Documents").
2. Each of the Guarantor Documents has been duly authorized,
executed and delivered by the Guarantor and constitutes the legal,
valid and binding obligations of the Guarantor, enforceable against the
Guarantor in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
3. The execution, delivery and compliance by the Guarantor
with all of the provisions of the Guarantor Documents will not conflict
with or result in any breach of any of the provisions or constitute a
default under or result in the creation or imposition of any lien or
encumbrance upon any of the property of the Guarantor pursuant to the
provisions of the charter or the by-laws of the Guarantor or any
material agreement or other instrument to which the Guarantor is a
party or by which the Guarantor may be bound or any existing law or
governmental regulation relating to or having jurisdiction over the
Guarantor or its activities.
4. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, federal or state, is necessary in connection with
the execution, delivery and performance by the Guarantor of the
Guarantor Documents.
5. The Tenant is a corporation duly organized, validly
existing and in good standing under the laws of Colorado and has the
corporate power and authority to enter into and perform the
Participation Agreement and each other Operative Document to which the
Tenant is a party (the "Tenant Documents").
6. The Tenant is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction in which any
Mortgaged Property is located.
EXHIBIT D
(to Participation Agreement)
52
Participation Agreement
7. Each of the Tenant Documents has been duly authorized,
executed and delivered by the Tenant and constitutes the legal, valid
and binding obligations of the Tenant, enforceable against the Tenant
in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity
or at law).
8. The execution, delivery and compliance by the Tenant with
all of the provisions of the Tenant Documents will not conflict with or
result in any breach of any of the provisions of or constitute a
default under or result in the creation or imposition of any lien or
encumbrance upon any of the property of the Tenant pursuant to the
provisions of the charter or the by-laws of the Tenant or any material
agreement or other instrument to which the Tenant is a party or by
which the Tenant may be bound or any existing law or governmental
regulation relating to or having jurisdiction over the Tenant or its
activities.
9. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, federal or state, is necessary in connection with
the execution, delivery and performance by the Tenant of the Tenant
Documents.
10. The issuance and sale of the Project Loan Notes under the
circumstances contemplated by the Project Loan Agreements do not, under
existing law, require the registration of the Project Loan Notes under
the Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
11. To the best of our knowledge after due inquiry, there is
no action, proceeding or governmental investigation pending or
threatened that (i) questions the validity of or challenges any of the
Tenant Documents or any of the transactions contemplated thereby, (ii)
would have an adverse effect on the benefits intended to be realized by
the Issuer, the Collateral Trustee or the Purchasers under any of the
Tenant Documents, or (iii) could reasonably be expected to have, either
in any case or in the aggregate, a materially adverse effect on the
business, properties, assets, operations or financial condition of
Guarantor or the Tenant.
12. The issuance and delivery of the Notes under the
circumstances contemplated by the Participation Agreement and the
Indenture do not, under existing law, require the registration of the
Notes under the Securities Act of 1933, as amended, or the
qualification of an indenture under the Trust Indenture Act of 1939, as
amended.
13. [NON-CONSOLIDATION OPINION CONCERNING PROJECT
BORROWERS].
The opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC shall cover such other matters
relating to the transactions contemplated by the Operative Documents as each
Purchaser may reasonably
D-2
53
Participation Agreement
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate Certificates of public
officials and other officers of the parties involved in the transaction.
D-3
54
Participation Agreement
DESCRIPTION OF CLOSING OPINION
OF EACH LOCAL COUNSEL FOR THE PROJECT BORROWERS
The closing opinion of various local counsel to the Project Borrowers,
called for by SECTION 2.13(D) of the Participation Agreement, shall be dated the
Closing Date and shall be satisfactory in form and substance to each Purchaser
and shall be to the effect that:
1. The Project Borrower is duly formed, validly existing and in good
standing under the laws of its jurisdiction of formation, and is duly qualified
to transact business as a limited liability company in the State of
_______________ (the "STATE").
2. Each of the Lease Documents has been duly authorized, executed and
delivered by the Project Borrower.
3. Each of the Project Loan Documents has been duly authorized,
executed and delivered by the Project Borrower.
4. No authorization, consent, approval, license, exemption or filing
or registration with any court or governmental department, commission, board,
bureau, agency or instrumentality in the State by the Project Borrower or any
affiliate of the Project Borrower is necessary for the valid execution, delivery
or performance by the Project Borrower of any of the Lease Documents or any of
the Project Loan Documents.
5. The execution, delivery and performance by the Project Borrower of
each Lease Document and each Project Loan Document do not (i) violate (A) the
organizational documents pursuant to which the Project Borrower is organized, or
(B) to our knowledge, any order, writ, judgment, injunction, decree,
determination or award applicable to the Project Borrower, (ii) result in a
breach or constitute a default under any indenture or loan or credit agreement
or any other agreement, lease or instrument (including, without limitation, the
Lease) to which it is a party or by which it or its properties are bound, where
such breach or default would have a material adverse effect on the financial
condition, properties or operations of the Project Borrower, or (iii) result in,
or require, the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance (other than those arising
pursuant to the Project Loan Documents).
6. There are no actions, suits or proceedings pending or, to our
knowledge after due inquiry, threatened against or affecting the Project
Borrower in any court or before any governmental authority or arbitration board
or tribunal that could reasonably be expected to materially and adversely affect
the execution, delivery or performance by the Project Borrower of its
obligations under any of the Lease Documents or any of the Project Loan
Documents, or the enforceability of the Project Borrower's obligations
thereunder.
EXHIBIT E-1
(to Participation Agreement)
55
Participation Agreement
DESCRIPTION OF CLOSING OPINION
OF EACH SPECIAL LOCAL COUNSEL FOR THE PROJECT BORROWERS
The closing opinion of various special local counsel to the Project
Borrowers, called for by SECTION 2.13(D) of the Participation Agreement, shall
be dated the Closing Date and shall be satisfactory in form and substance to
each Purchaser and shall be to the effect that:
1. The Project Loan Documents constitute the legal, valid and binding
obligations of the Project Borrower, enforceable against the Project Borrower in
accordance with their respective terms.
2. The Lease Documents constitute the legal, valid and binding
obligations of the Project Borrower, the Tenant, and the Guarantor (where
applicable), enforceable against each in accordance with their respective terms.
3. The Mortgage is in proper form satisfactory for recording in the
appropriate public office for the recording of instruments affecting title to
real property in each county in which any portion of the real property described
therein is located, and upon such recordation shall constitute a valid lien upon
the real property interest described therein, as security for the Project Loan
and the Project Borrower's obligations under the Project Loan Agreement in favor
of the Issuer. No other recordation or filing is required to create or preserve
the validity of such lien.
4. The Assignment of Lease and Rents is in proper form satisfactory
for recording in the appropriate public office for the recording of instruments
affecting title to real property in each county in which any portion of the real
property described therein is located, and upon such recordation shall create a
valid collateral or assignment of, or a valid security interest in, the Project
Borrower's interests described therein in favor of the Issuer.
5. The Memorandum of Lease is in proper form satisfactory for
recording in the appropriate public office for the recording of instruments
affecting title to real property in each county in which any portion of the
leased property described in the Lease is located.
6. The Assignment of Mortgage is in proper form satisfactory for
recording in the appropriate public office for the recording of instruments
affecting title to real property in each county in which any portion of the real
property described therein is located, and upon such recordation shall create a
valid collateral assignment of, or a valid security interest in, the Issuer's
interests described therein in favor of the Collateral Trustee.
7. The Reassignment of Lease and Rents is in proper form satisfactory
for recording in the appropriate public office for the recording of instruments
affecting title to real property in each county in which any portion of the real
property described therein is located, and upon such recordation shall create a
valid collateral assignment of, or a valid security interest in, the Issuer's
interests described therein in favor of the Collateral Trustee.
EXHIBIT E-2
(to Participation Agreement)
56
Participation Agreement
8. The Mortgage creates a security interest in the portions of the
Mortgaged Property constituting fixtures, if any, and no financing or other
statements are required to be filed to perfect such security interest under the
Uniform Commercial Code as in effect in the State (the "UCC"), provided that the
Mortgage is properly recorded in each county in which any portion of such
fixtures are located.
9. To the extent that any property which secures the Project Loan or
which constitutes Collateral and in which a security interest can be granted
under the UCC (the "CODE COLLATERAL") is deemed located in the State for
purposes of the UCC, upon the recordation or filing of the Financing Statements
(as defined in the opinion) in the Filing Offices (as defined in the opinion),
the Issuer and the Collateral Trustee, as applicable, shall have a perfected
security interest in and perfected lien upon the Code Collateral to the extent
that perfection thereof is obtained by the filing of financing statements. To
continue the effectiveness of the Financing Statements, continuation statements
must be filed in the office in which the Financing Statements have been filed
within six months prior to the expiration of each fifth anniversary of the date
of filing of the Financing Statements. Any such continuation statement must be
signed by the secured party, who should identify the original statement by file
number and state that the original statement is still effective. No other
recordation or filing is required to preserve such interest in or lien upon the
Code Collateral. Other than the filing fee required to be paid at the time of
recording the Financing Statements, no other fees, taxes or other charges are
due in the State in connection with the execution, delivery, filing and
recording of the Financing Statements.
10. The execution, delivery and performance by the Project Borrower of
the Lease Documents and the Project Loan Documents do not violate any provision
of law, rule or regulation of the State.
11. Based solely on the interest specified in the Project Loan
Documents of 8.69% per annum on the outstanding but unpaid principal on the
Project Loan Note, the Project Loan Documents and the transactions contemplated
thereby do not violate the usury laws of the State.
12. The execution, delivery and performance by the Tenant of the Lease
Documents do not violate any provision of law, rule or regulation of the State.
13. The execution, delivery and performance by the parties thereto of
the Credit Documents do not violate any provision of law, rule or regulation of
the State.
14. No fees, taxes, or other charges, including, without limitation,
intangible documentary stamp, mortgage, transfer or recording taxes or similar
charges, are payable to the government of the State or to any jurisdiction
therein on account of the execution, delivery or ownership of the Project Loan
Documents, the Lease Documents and the Credit Documents, the creation of the
indebtedness evidenced or secured thereby, the creation of the liens and
security interests thereunder, or the filing, recording, or registration of the
Mortgage, the Assignment of
E-2-2
57
Participation Agreement
Mortgage, the Assignment of Lease and Rents, the Reassignment of Lease and Rents
or the Financing Statement except for nominal filing or recording fees.
15. Neither the Issuer, the Collateral Trustee nor any of the
Noteholders is required to pay any tax, to be qualified to do business in the
State, to file any reports, or to comply with any statutory or regulatory rule
or requirement applicable only to financial institutions chartered or qualified
to do business in the State solely by reason of the execution, delivery or
acceptance of the Project Loan Documents, the Lease Documents or the Credit
Documents. The validity and enforceability of, and the exercise of any right or
remedy under or with respect to, the Project Loan Documents, the Lease Documents
and the Credit Documents will not be precluded by any failure to so qualify or
file.
16. The Mortgage and the Financing Statements conform to all
requirements of the laws of the State and the Mortgage contains remedial, waiver
and other provisions which will allow the Issuer and, upon recording of the
Assignment of Mortgage, the Collateral Trustee to realize the practical benefits
intended to be conferred thereby. The Project Loan Documents and the Lease
Documents grant to the Issuer and, upon recording of the Credit Documents, to
the Collateral Trustee, remedies including, but not limited to, the rights to
(a) foreclose the Project Borrower's interests in the property securing the
Project Loan, (b) execute upon the Project Borrower's interests in the property
securing the Project Loan, (c) apply to a state court of the State for the
appointment of a receiver, (d) cite the Project Borrower's failure to pay taxes
as evidence of waste, and (e) collect the rents from the property securing the
Project Loan. Each of the remedies listed in the preceding sentence is a remedy
commonly sought by lenders whose loans are secured by real and personal property
in the State. Enforcement of the remedies provided in the Project Documents and
the Lease Documents with respect to the Project Borrower or its property will
not, except as expressly limited by the terms of the Project Documents and the
Lease Documents, deprive the Issuer and, upon recording of the Credit Documents,
the Collateral Trustee of their rights to seek a deficiency judgment or limit
the rights of the Issuer and the Collateral Trustee to foreclose on other
security or collateral securing the Project Loan.
17. In connection with the remedies provided in the Mortgage:
(a) The exercise at any time and in any order of any remedies
available against the Code Collateral or any other Mortgaged Property will not
affect nor be affected by the exercise of any remedies relating to the Mortgaged
Property, unless the Project Loan has been paid in full and all obligations
under the Project Loan Documents have been performed in full.
(b) The exercise of any remedies with respect to any security or
collateral located outside of the State securing the Project Loan will not
affect or limit the Issuer's or the Collateral Trustee's ability to foreclose
against, or exercise any other remedies with respect to the Mortgaged Property,
except to the extent that the fair value of such security or collateral so
E-2-3
58
Participation Agreement
sold or disposed of has been appropriately applied to the repayment of the
Project Loan or unless the Project Loan has been paid in full and all
obligations under the Project Loan Documents have been performed in full.
(c) There is no "one form of action" or similar law in the State
that would limit the Issuer or the Collateral Trustee or any other secured party
from choosing only one remedy to enforce its or their rights under the Mortgage
or the other Project Loan Documents.
E-2-4
59
Participation Agreement
REPRESENTATIONS AND WARRANTIES OF ISSUER
Capitalized terms used herein shall have the respective meanings as set
forth in the Participation Agreement.
Each of the Trust Company and the Issuer represents and warrants (as to
itself only) as follows (provided that the representations in the following
paragraphs 6 through 17 are made solely by the Issuer):
1. It is a corporation 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 the Trust Company is a party (the "Issuer
Documents").
2. The execution, delivery and performance by the Issuer of
each of the Issuer Documents have been duly authorized by all necessary
action on its part and neither the execution and delivery thereof, nor
the consummation of the transactions contemplated thereby, nor
compliance by it with any of the terms and provisions thereof does or
will (i) require any approval or consent of any trustee or holders of
any of its indebtedness or obligations, (ii) contravene any current
law, governmental rule or regulation of the State of Delaware or any
United States federal law, rule or regulation, in each case relating to
it, (iii) contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any of its
property under, its organizational documents, or any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement or other agreement or instrument to which
it is a party or by which it or its properties may be bound or affected
or (iv) require any authority, approval or other action by any
Governmental Authority or agency of the State of Delaware or any
federal authority governing the banking or trust powers of the Issuer.
3. Each of the Issuer Documents has been, or will be, duly
executed and delivered by the Trust Company or the Issuer, as the case
may be, and constitutes, or upon execution and delivery will
constitute, a legal, valid and binding obligation enforceable against
the Trust Company (to the extent expressly provided therein) or the
Issuer, as the case may be, in accordance with its respective terms.
4. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority of the State of Delaware or of the
United States government governing the banking or trust powers of the
Issuer is pending or, to the knowledge of the Issuer, threatened by or
against the Issuer (a) with respect to any of the Issuer Documents or
any of the transactions contemplated thereby, or (b) which could have a
material adverse effect on the business or financial condition of the
Issuer or the validity or enforceability of any of the Issuer
Documents.
60
Participation Agreement
EXHIBIT F
(to Participation Agreement)
5. It has not assigned or transferred, or granted any lien in
respect of, any of its rights, title or interest in or under any
Project Loan, except in accordance with the Issuer Documents.
6. The Issuer is not in default under or with respect to any
of its contractual obligations in any respect which could have a
material adverse effect on the business or financial condition of the
Issuer or the validity or enforceability of any of the Issuer
Documents. No Default or Event of Default has occurred and is
continuing.
7. The proceeds of the Loans shall be applied by the Issuer
solely to make Project Loans to the Project Borrowers.
8. The Issuer's principal place of business, chief executive
office and office where the documents, accounts and records relating to
the transaction contemplated by this Participation Agreement and each
other Operative Document are located is in Wilmington, Delaware and the
Issuer's mailing address is: c/o Wilmington Trust Company, ▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
9. No part of the proceeds of any Loans will be used for
"purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by any Purchaser, the Issuer will
furnish to such Purchaser a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said
Regulation U.
10. The Issuer is not an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act.
11. The originally executed copy of each Project Loan Note and
an originally executed copy of each other Project Loan Document has
been delivered to the Collateral Trustee on or prior to the Closing
Date.
12. As of the Closing Date, no Project Loan Note or any
related Project Loan Document has been assigned or pledge to a third
party other than the Collateral Trustee. The Issuer has good and
marketable title to each Project Loan Note and related Project Loan
Documents purported to be collaterally assigned by the Issuer, and the
Issuer is the sole owner thereof and has full right and power to hold
and to create a Lien on such Project Loan Note and related Project Loan
Documents in favor of the Trustee.
13. The Issuer has collaterally assigned to the Collateral
Trustee the Project Loan Documents and the Collateral Trustee has a
first perfected Lien on all such Project Loan Documents.
F-2
61
Participation Agreement
14. The Issuer represents and warrants that the Issuer has
not, directly or indirectly, nor has any agent on its behalf, offered
or will offer any Note or any similar security to or has solicited or
will solicit an offer to acquire any Note or any similar security from
any person in such manner as to bring the issuance and sale of the
Notes within the provisions of Section 5 of the Securities Act of 1933,
as amended.
15. The consummation of the transactions provided for in the
Issuer Documents and compliance by the Issuer with the provisions
thereof and the collateral assignment of the Project Loans thereunder
will not involve any prohibited transaction within the meaning of the
Employee Retirement Income Security Act of 1974, as amended, or Section
4975 of the Internal Revenue Code of 1986, as amended.
16. The Issuer has not waived or agreed to any waiver under,
or agreed to any amendment or other modification of, any Project Loan
Note, or any Project Loan Document.
17. The Issuer has not nor has anyone acting on its behalf
offered, transferred, pledged, sold or otherwise disposed of any Note,
any interest in any Note or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of
any Note, any interest in the Notes or any other similar security, or
otherwise approached or negotiated with respect to the Notes, any
interest in the Notes or any other similar security with, any person in
any manner which would, or made any general solicitation by means of
general advertising or in any other manner or taken any other action
which would, constitute a distribution of the Notes under the
Securities Act of 1933, as amended, or which would render the
disposition of the Notes a violation of Section 5 of the Securities Act
of 1933, as amended, or require registration pursuant thereto.
F-3
62
Participation Agreement
REPRESENTATIONS AND WARRANTIES OF COLLATERAL TRUSTEE
Capitalized terms used herein shall have the respective meanings as set
forth in the Participation Agreement.
The Collateral Trustee hereby represents and warrants that:
1. The Collateral Trustee is a national banking association
duly organized, validly existing, and in good standing under the laws
of the United States of America.
2. The Collateral Trustee has full power, authority and
legal right under the laws of the United States pertaining to its
banking and trust powers to execute, deliver, and perform each of the
Operative Documents to which it is a party (the "Trustee Documents")
and to authenticate and deliver the Notes and has taken all necessary
action to authorize the execution, delivery, and performance by it of
each of the Trustee Documents and to authenticate and deliver the
Notes.
3. The execution, delivery and performance by the Collateral
Trustee of each of the Trustee Documents will not contravene any law,
rule or regulation of the States of New York or Utah or any United
States governmental authority or agency regulating the Collateral
Trustee's banking or trust powers or any judgment or order applicable
to or binding on the Collateral Trustee and will not contravene or
result in any breach of, or constitute a default under, the Collateral
Trustee's articles of association or by-laws or the provision of any
indenture, mortgage, contract or other agreement to which it is a party
or by which it or any of its properties is bound.
4. The execution, delivery and performance by the Collateral
Trustee of each of the Trustee Documents and the authentication of the
Notes will not require the authorization, consent, or approval of, the
giving of notice to, the filing or registration with, or the taking of
any other action in respect of, any United States or State of Utah
governmental authority or agency regulating the banking and trust
activities of the Collateral Trustee.
5. Each of the Trustee Documents have been duly executed and
delivered by the Collateral Trustee and constitutes the legal, valid,
and binding agreements of the Collateral Trustee, enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
6. The Collateral Trustee is not or will not, as a result of
the performance of its duties under the Indenture, be required to be
registered as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
EXHIBIT G
(to Participation Agreement)
63
Participation Agreement
REPRESENTATIONS AND WARRANTIES
OF GUARANTOR
1. The Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation. The
Guarantor has the lawful power to own or lease its properties and to engage in
the business it presently conducts or proposes to conduct.
2. The Guarantor has full power to enter into, execute, deliver and
carry out the Operating Documents to which it is a party (the "Guarantor
Documents") and to perform obligations under each of the Guarantor Documents and
all such actions have been duly authorized by all necessary proceedings on its
part.
3. The Guarantor has duly and validly executed and delivered each of
the Guarantor Documents. Each such Guarantor Document constitutes the legal,
valid and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, except to the extent that enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforceability of creditors' rights generally or
limiting the right of specific performance.
4. Neither the execution and delivery of the Guarantor Documents nor
the consummation of the transactions therein contemplated nor the compliance
with the terms and provisions thereof will (i) violate any provision of any
existing law, statute, rule or regulation applicable to the Guarantor or (ii)
conflict with, constitute a default under or result in any breach of (a) the
terms and conditions of the certificate of incorporation, by-laws or other
organizational documents of the Guarantor or (b) any agreement or instrument or
order, writ, judgment, injunction or decree to which the Guarantor is a party or
by which the Guarantor or any of its properties may be subject or bound, or
(iii) result in the creation or enforcement of any Lien, charge or encumbrance
whatsoever upon any property (now or hereafter acquired) of the Guarantor.
5. Except as disclosed in the Form 10Q for the quarter ending July 23,
2000 (including Note 2 -- Commitments and Contingencies to the Financial
Statements) by Guarantor with the Securities and Exchange Commission, there are
no actions, suits, proceedings or investigations pending or, to the knowledge of
the Guarantor threatened against the Guarantor or any of its Subsidiaries before
any Governmental Authority which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Neither the Guarantor
nor any of its Subsidiaries is in violation of any order, writ, injunction or
any decree of any Governmental Authority which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
6. The Guarantor has delivered to each of the Purchasers copies of its
audited consolidated financial statements dated January 23, 2000 (the "Annual
Statements"). In addition, the Guarantor has delivered to each of the Purchasers
copies of its unaudited
EXHIBIT H-1
(to Participation Agreement)
64
Participation Agreement
consolidated interim financial statements dated July 23, 2000 (the "Interim
Statements") (the Annual Statements and the Interim Statements being
collectively referred to as the "Historical Statements"). The Historical
Statements were compiled from the books and records maintained by the
Guarantor's management, are correct and complete and fairly represent the
consolidated financial condition of the Guarantor and its Subsidiaries as of
their dates and the results of operations for the fiscal periods then ended and
have been prepared in accordance with GAAP consistently applied (except as
disclosed in such financial statements), subject (in the case of the Interim
Statements) to normal year end audit adjustments.
7. Neither the Guarantor nor any of its Subsidiaries (including the
Tenant) has any material liabilities, contingent or otherwise, or forward or
long-term commitments that are not disclosed in the Historical Statements
referenced in the foregoing paragraph (6) or in the notes thereto, other than as
incurred in the ordinary course of business after the date of such statements.
Except as disclosed therein or on the schedules thereto, there are no unrealized
or anticipated losses from any commitments of the Guarantor or any Subsidiary of
the Guarantor which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect. Since the date of the Interim
Statements, no circumstances or events have occurred which could reasonably be
expected to have a Material Adverse Effect.
8. On the Closing Date, no Guarantor Documents or any certificate,
statement, financial or otherwise, agreement or other documents furnished to the
Purchasers in connection therewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. On the Closing Date, there is no fact known to the Guarantor which
could reasonably be expected to have a Material Adverse Effect and which has not
been set forth in this Certificate or in the certificates, Historical
Statements, agreements or other documents furnished in writing to the Purchasers
prior to or on the Closing Date in connection with the transactions contemplated
by the Guarantor Documents.
9. No consent, approval, exemption, order or authorization of, or
registration or filing with any Governmental Authority or any other Person is
required by law or any agreement in connection with the execution and delivery
by the Guarantor of the Guarantor Documents, the consummation of the
transactions therein contemplated and the compliance with the terms and
provisions thereof.
10. No Event of Default or Default has occurred and is continuing.
Neither the Guarantor nor any of its Subsidiaries (including the Tenant) is in
violation of (i) any term of its certificate of incorporation, by-laws, or other
organizational documents or (ii) any agreement or instrument or order, writ,
judgment, injunction or decree to which it is a party or by which it or any of
its properties may be subject or bound where such violation individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
11. The Guarantor and its Subsidiaries (including the Tenant) are in
compliance in respects with all applicable laws in all jurisdictions in which
the Guarantor or any of its
H-1-2
65
Participation Agreement
Subsidiaries is presently or will be doing business except where the failure to
do so individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
12. All contracts which are material to the business operations of the
Guarantor and its Subsidiaries (including the Tenant) are valid, binding and
enforceable upon the Guarantor and each such Subsidiary, as applicable, and each
of the other parties thereto in accordance with their respective terms, and
there is no default thereunder, to the Guarantor's knowledge, with respect to
parties other than the Guarantor or its Subsidiaries which could be expected to
have a Material Adverse Effect.
13. (a) Except as otherwise disclosed in the January 2001 Phase I
Environmental Site Assessments prepared by EMG for each Mortgaged Property (the
"Reports"), there are no circumstances at, on or under any Mortgaged Property
that constitute a material breach of or material noncompliance with any of the
Environmental Laws, and there are no past or present Environmental Violations
at, on or under any Mortgaged Property or, to the knowledge of the Guarantor at,
on or under adjacent property, that prevent compliance with the Environmental
Laws at any Mortgaged Property or that otherwise would require that any removal,
remediation or other corrective action or cleanup be taken with respect to any
Mortgaged Property.
(b) No Mortgaged Property and no structures, improvements,
equipment, fixtures, activities or facilities thereon or thereunder
contain or use Hazardous Substances except in compliance with
Environmental Laws. Except as may otherwise be disclosed in the
Reports, there are no processes, facilities, operations, equipment or
any other activities at, on or under such property, or, to the
knowledge of the Guarantor at, on or under adjacent property, that have
resulted or are currently resulting in the release or threatened
release of Hazardous Substances onto any Mortgaged Property, except to
the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws.
(c) There are no above ground storage tanks, underground
storage tanks or underground piping associated with such tanks, used
for the management of Hazardous Substances at, on or under any
Mortgaged Property that (a) do not have a full operational secondary
containment system in place, and (b) are not otherwise in compliance
with all Environmental Laws. Except as may otherwise be disclosed in
the Reports, there are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used for the
management of Hazardous Substances at, on or under any Mortgaged
Property that have not either been closed in place in accordance with
Environmental Laws or removed in compliance with all applicable
Environmental Laws and no contamination associated with the use of such
tanks exists on such property.
(d) All material permits, licenses, authorizations, plans and
approvals necessary under the Environmental Laws for the conduct of
business by the
H-1-3
66
Participation Agreement
Tenant on the Mortgaged Properties as presently conducted have been
obtained. All material notices, reports and other filings required by
the Environmental Laws to be submitted to a Governmental Authority
which pertain to past and current operations on the Mortgaged
Properties have been submitted.
(e) All present, and, based upon the Reports, to the best of
Guarantor's knowledge, all past on-site generation, storage,
processing, treatment, recycling, reclamation, disposal or other use or
management of Hazardous Substances at, on, or under any Mortgaged
Property and all off-site transportation, storage, processing,
treatment, recycling, reclamation, disposal or other use or management
of Hazardous Substances has been done in material compliance with the
Environmental Laws.
14. The representations and warranties of the Guarantor set forth in
each Guarantor Document are true and correct in all material respects. The
Guarantor is in compliance with its obligations under the Guarantor Documents
and there exists no Default or Event of Default by the Guarantor under any of
the Guarantor Documents.
15. The aggregate amount of Project Loan Debt Service (as defined in
the Project Loan Agreements) and payable as Basic Rent due under all Leases for
each calendar month occurring while the Notes are scheduled to be outstanding
equals the Monthly Amortization for such calendar month.
16. Neither the Guarantor nor any of its affiliates or partners,
members, directors or officers is or has been the subject of, or a defendant in:
(a) an enforcement action or prosecution (or settlement in lieu thereof) brought
by a governmental authority relating to a violation of securities, tax,
fiduciary or criminal laws, or (ii) a civil action (or settlement in lieu
thereof) brought by investors in a common investment vehicle for violation of
duties owed to the investors. Guarantor covenants that it will notify the
Collateral Trustee within five (5) days in the event any such action or
prosecution is initiated while the Notes are outstanding.
17. To the Guarantor's knowledge, no trustee or employee of the State
of Wisconsin Investment Board identified on the list attached hereto as Annex I,
either directly or indirectly (a) currently holds, except as may be specifically
set forth below, a personal interest in the Guarantor or any of its Subsidiaries
(together, the "Entity") or the Entity's property or securities, or (b) will, in
connection with the Notes, receive (i) a personal interest in the Entity or the
Entity's property or securities, nor (ii) anything of substantial economic value
for his or her private benefit from the Entity or anyone acting on its behalf.
As to ownership of an interest in the Entity's publicly traded securities,
"knowledge" hereunder is based on an examination of record holders of the
Entity's securities and actual knowledge of the Guarantor.
H-1-4
67
ANNEX I
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ III
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
H-1-5
68
Participation Agreement
REPRESENTATIONS AND WARRANTIES
OF TENANT
1. Tenant is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation. Tenant has
the lawful power to own or lease its properties and to engage in the business it
presently conducts or proposes to conduct. Tenant is duly licensed or qualified
and in good standing in each jurisdiction in which any Property is located.
2. Tenant has full power to enter into, execute, deliver and carry out
the Operating Documents to which it is a party (the "Tenant Documents") and to
perform obligations under each of the Tenant Documents and all such actions have
been duly authorized by all necessary proceedings on its part.
3. Tenant has duly and validly executed and delivered each of the
Tenant Documents. Each such Tenant Document constitutes the legal, valid and
binding obligation of Tenant enforceable against Tenant in accordance with its
terms, except to the extent that enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance.
4. Neither the execution and delivery of the Tenant Documents nor the
consummation of the transactions therein contemplated nor the compliance with
the terms and provisions thereof will (i) violate any provision of any existing
law, statute, rule or regulation applicable to Tenant or (ii) conflict with,
constitute a default under or result in any breach of (a) the terms and
conditions of the certificate of incorporation, by-laws or other organizational
documents of Tenant or (b) any agreement or instrument or order, writ, judgment,
injunction or decree to which Tenant is a party or by which Tenant or any of its
properties may be subject or bound, or (iii) result in the creation or
enforcement of any Lien, charge or encumbrance whatsoever upon any property (now
or hereafter acquired) of Tenant.
5. There are no actions, suits, proceedings or investigations pending
or, to the knowledge of Tenant threatened against Tenant or any of its
Subsidiaries before any Governmental Authority which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Neither Tenant nor any of its Subsidiaries is in violation of any order, writ,
injunction or any decree of any Governmental Authority which individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
6. On the Closing Date, no Tenant Documents or any certificate,
statement, financial or otherwise, agreement or other documents furnished to the
Purchasers in connection therewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. On the Closing Date, there is no fact known to Tenant which could
reasonably be expected to have a Material Adverse Effect and which has not been
set forth in this Certificate or in the certificates, Historical Statements,
agreements or other documents
EXHIBIT H-2
(to Participation Agreement)
69
Participation Agreement
furnished in writing to the Purchasers prior to or on the Closing Date in
connection with the transactions contemplated by the Tenant Documents.
7. No consent, approval, exemption, order or authorization of, or
registration or filing with any Governmental Authority or any other Person is
required by law or any agreement in connection with the execution and delivery
by Tenant of the Tenant Documents, the consummation of the transactions therein
contemplated and the compliance with the terms and provisions thereof.
8. (a) Except as otherwise disclosed in the January 2001 Phase I
Environmental Site Assessments prepared by EMG for each Mortgaged Property (the
"Reports"), there are no circumstances at, on or under any Mortgaged Property
that constitute a material breach of or material noncompliance with any of the
Environmental Laws, and there are no past or present Environmental Violations
at, on or under any Mortgaged Property or, to the knowledge of Tenant at, on or
under adjacent property, that prevent compliance with the Environmental Laws at
any Mortgaged Property or that otherwise would require that any removal,
remediation or other corrective action or cleanup be taken with respect to any
Mortgaged Property.
(b) No Mortgaged Property and no structures, improvements,
equipment, fixtures, activities or facilities thereon or thereunder
contain or use Hazardous Substances except in compliance with
Environmental Laws. Except as may otherwise be disclosed in the
Reports, there are no processes, facilities, operations, equipment or
any other activities at, on or under such property, or, to the
knowledge of Tenant at, on or under adjacent property, that have
resulted or are currently resulting in the release or threatened
release of Hazardous Substances onto any Mortgaged Property, except to
the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws.
(c) There are no above ground storage tanks, underground
storage tanks or underground piping associated with such tanks, used
for the management of Hazardous Substances at, on or under any
Mortgaged Property that (a) do not have a full operational secondary
containment system in place, and (b) are not otherwise in compliance
with all Environmental Laws. Except as may otherwise be disclosed in
the Reports, there are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used for the
management of Hazardous Substances at, on or under any Mortgaged
Property that have not either been closed in place in accordance with
Environmental Laws or removed in compliance with all applicable
Environmental Laws and no contamination associated with the use of such
tanks exists on such property.
(d) All material permits, licenses, authorizations, plans and
approvals necessary under the Environmental Laws for the conduct of
business by Tenant on the Mortgaged Properties as presently conducted
have been obtained. All material notices, reports and other filings
required by the Environmental Laws to
H-2-2
70
Participation Agreement
be submitted to a Governmental Authority which pertain to past and
current operations on the Mortgaged Properties have been submitted.
(e) All present, and, based upon the Reports, to the best of
Tenant's knowledge, all past on-site generation, storage, processing,
treatment, recycling, reclamation, disposal or other use or management
of Hazardous Substances at, on, or under the Mortgaged Property and all
off-site transportation, storage, processing, treatment, recycling,
reclamation, disposal or other use or management of Hazardous
Substances has been done in material compliance with the Environmental
Laws.
9. The representations and warranties of Tenant set forth in each
Tenant Document are true and correct in all material respects. Tenant is in
compliance with its obligations under the Tenant Documents and there exists no
Default or Event of Default by Tenant under any of the Tenant Documents.
10. Upon the execution and delivery of each Lease, (i) Tenant will have
unconditionally accepted the Mortgaged Property subject to such Lease, (ii) no
offset will exist with respect to any Basic Rent or other sums payable under
such Lease and (iii) no Basic Rent or Supplemental Rent under any Lease will
have been prepaid except as otherwise required by the Operative Documents.
11. No portion of any Mortgaged 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 Mortgaged 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 Mortgaged Property in accordance with Article XV of each Lease
and in accordance with the National Flood Insurance Act of 1968, as amended.
12. Tenant has obtained insurance coverage for each Mortgaged Property
which meets the requirements of Article XV of each Lease and all of such
coverage is in full force and effect.
13. To the actual knowledge of Tenant, each Mortgaged Property (i)
complies in all material respects with all applicable laws, rules and
regulations of all governmental authorities (including, without limitation, all
zoning and land use laws and Environmental Laws); or (ii) does not comply with
certain state and local land use, zoning and related legal requirements (other
than Environmental Laws) which have been identified in writing to the Purchasers
and which the Purchasers have deemed immaterial.
14. To the actual knowledge of Tenant, all consents, licenses and
building permits required by all applicable laws, rules and regulations of all
governmental authorities, occupancy and operation of each Mortgaged Property (i)
have been obtained and are in full force and effect; or (ii) have not been
obtained (such consents, licenses and building permits having been identified in
writing to the Purchasers and which the Purchasers have deemed immaterial).
H-2-3
71
Participation Agreement
REPRESENTATIONS AND WARRANTIES OF OWNER BENEFICIARY
Capitalized terms used herein shall have the respective meanings as set
forth in the Participation Agreement.
The Owner Beneficiary hereby represents and warrants that:
1. The Owner Beneficiary is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
2. The Owner Beneficiary has full power, authority and legal
right to execute, deliver, and perform each of the Operative Documents
to which it is a party (the "Owner Beneficiary Documents") and has
taken all necessary corporate action to authorize the execution,
delivery, and performance by it of each of the Owner Beneficiary
Documents.
3. The execution, delivery and performance by the Owner
Beneficiary of each of the Owner Beneficiary Documents will not
contravene any law, rule or regulation or any judgment or order
applicable to or binding on the Owner Beneficiary and will not
contravene or result in any breach of, or constitute a default under,
the Owner Beneficiary's certificate of incorporation or by-laws or the
provision of any indenture, mortgage, contract or other agreement to
which it is a party or by which it or any of its properties is bound.
4. The execution, delivery and performance by the Owner
Beneficiary of each of the Owner Beneficiary Documents will not require
the authorization, consent, or approval of, the giving of notice to,
the filing or registration with, or the taking of any other action in
respect of, any governmental authority.
5. Each of the Owner Beneficiary Documents have been duly
executed and delivered by the Owner Beneficiary and constitutes the
legal, valid, and binding agreements of the Owner Beneficiary,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
6. The Owner Beneficiary is not or will not, as a result of
the performance of its duties under the Indenture, be required to be
registered as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
EXHIBIT I
(to Participation Agreement)